MERCURY ASSET MANAGEMENT MASTER TRUST, POS AMI, 2000-06-19

MERCURY ASSET MANAGEMENT MASTER TRUST
POS AMI, 2000-06-19

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON JUNE 19, 2000

FILE NO. 811-09049

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM N-1A
REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940 [x]
AMENDMENT NO.6

(CHECK APPROPRIATE BOX OR BOXES)

MERCURY ASSET MANAGEMENT MASTER TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

P.O. BOX 9011, PRINCETON, NEW JERSEY 08543-9011
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

(888) 763-2260
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

JEFFREY M. PEEK
BOX 9011
PRINCETON, NEW JERSEY 08543-9011
(NAME AND ADDRESS OF AGENT FOR SERVICE)

Copies to:

Counsel for the Trust:

JOEL H. GOLDBERG, Esq. and ROBERT E. PUTNEY, III, Esq.
Swidler Berlin Shereff Friedman, LLP P.O. Box 9011
The Chrysler Building Princeton, New Jersey 08543-9011
405 Lexington Avenue
New York, New York 10174

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EXPLANATORY NOTE

This Registration Statement has been filed by the Registrant pursuant to
Section 8(b) of the Investment Company Act of 1940, as amended (the "Investment
Company Act"). However, beneficial interests in the Registrant are not being
registered under the Securities Act of 1933, as amended (the "1933 Act")
because such interests will be issued solely in private placement transactions
that do not involve any "public offering" within the meaning of Section 4(2) of
the 1933 Act. Investments in the Registrant may be made only by a limited
number of institutional investors, including investment companies, common or
commingled trust funds, group trusts and certain other "accredited investors"
within the meaning of Regulation D under the 1933 Act. This Registration
Statement does not constitute an offer to sell, or the solicitation of an offer
to buy, any beneficial interests in the Registrant.

This Registration Statement has been prepared as a single document
consisting of Parts A, B and C, none of which is to be used or distributed as a
stand alone document.

Parts A and B of Amendment No. 5 to the Registrant's Registration
Statement, dated March 3, 2000, which relate to the Mercury Master Global
Balanced Portfolio, are incorporated by reference into this Amendment No. 6 to
the Registrant's Registration Statement.

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TABLE OF CONTENTS

PART A. INFORMATION REQUIRED IN A PROSPECTUS
ITEM 1. FRONT AND BACK COVER PAGES..............................*
ITEM 2. RISK/RETURN SUMMARY: INVESTMENTS, RISKS AND
PERFORMANCE.............................................*
ITEM 3. RISK/RETURN SUMMARY: FEE TABLE..........................*
ITEM 4. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT
STRATEGIES, AND RELATED RISKS...........................3
ITEM 5. MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE........*
ITEM 6. MANAGEMENT, ORGANIZATION, AND CAPITAL
STRUCTURE..............................................20
ITEM 7. SHAREHOLDER INFORMATION................................24
ITEM 8. DISTRIBUTION ARRANGEMENTS..............................27
ITEM 9. FINANCIAL HIGHLIGHTS INFORMATION........................*

PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL
INFORMATION
ITEM 10. COVER PAGE AND TABLE OF CONTENTS.......................28
ITEM 11. TRUST HISTORY..........................................28
ITEM 12. DESCRIPTION OF THE PORTFOLIOS AND THEIR INVESTMENTS
AND RISKS..............................................29
ITEM 13. MANAGEMENT OF THE REGISTRANT...........................59
ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS
OF SECURITIES..........................................62
ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.................63
ITEM 16. BROKERAGE ALLOCATION AND OTHER PRACTICES...............66
ITEM 17. CAPITAL STOCK AND OTHER SECURITIES.....................69
ITEM 18. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.........70
ITEM 19. TAXATION OF THE TRUST..................................72
ITEM 20. UNDERWRITERS...........................................73
ITEM 21. CALCULATION OF PERFORMANCE DATA........................74
ITEM 22. FINANCIAL STATEMENTS...................................74

PART C. OTHER INFORMATION
ITEM 23. EXHIBITS...............................................C-1
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
WITH THE TRUST.........................................C-4
ITEM 25. INDEMNIFICATION........................................C-5
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT
ADVISER................................................C-7

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ITEM 27. PRINCIPAL UNDERWRITERS.................................C-12
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.......................C-13
ITEM 29. MANAGEMENT SERVICES....................................C-14
ITEM 30. UNDERTAKINGS...........................................C-14

* Responses to Items 1,2,3,5 and 9 have been omitted pursuant to paragraph
2(b) of Instruction B of the General Instructions to Form N-1A.

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Mercury Master International Portfolio
Mercury Master Pan-European Growth Portfolio
Mercury Master U.S. Large Cap Portfolio
Mercury Master Gold and Mining Portfolio
Mercury Master U.S. Small Cap Growth Portfolio
Mercury Master Select Growth Portfolio

PART A

ITEM 4. INVESTMENT OBJECTIVES, PRINCIPAL INVESTMENT STRATEGIES, AND RELATED
RISKS.

Mercury Asset Management Master Trust (the "Trust") is a no-load, open-end
management investment company which was organized as a Delaware business trust
on April 23, 1998. Mercury Master Pan-European Growth Portfolio ("Pan-European
Growth Portfolio"), Mercury Master International Portfolio ("International
Portfolio"), Mercury Master U.S. Large Cap Portfolio ("U.S. Large Cap
Portfolio"), Mercury Master Gold and Mining Portfolio ("Gold and Mining
Portfolio"), Mercury Master U.S. Small Cap Growth Portfolio ("U.S. Small Cap
Growth Portfolio") and Mercury Master Select Growth Portfolio ("Select Growth
Portfolio") (together, the "Portfolios" and each, a "Portfolio") are each
separate series of the Trust. Each Portfolio is a diversified investment
company with different investment objectives and policies. There can, of
course, be no assurance that the respective investment objectives of the
Portfolios can be achieved.

INVESTMENT OBJECTIVES AND PRINCIPAL INVESTMENT STRATEGIES

INTERNATIONAL PORTFOLIO AND PAN-EUROPEAN GROWTH PORTFOLIO

International Portfolio

International Portfolio's main objective is long-term capital growth
through investments primarily in a diversified portfolio of equity securities
of companies located outside the United States. In selecting securities, the
Portfolio emphasizes those securities that Portfolio management believes are
undervalued or have good prospects for earnings growth. International Portfolio
will, under normal circumstances, invest at least 80% of its total assets in
equity securities of at least two different countries outside the United
States.

International Portfolio invests in securities of companies located in
developed countries and countries with emerging capital markets outside the
United States. International Portfolio may invest, without limit, in countries
with emerging capital markets, including countries in Eastern Europe, Latin
America and the Far East. International Portfolio allocates investments to
countries that the

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management of the Portfolio believes, based on an evaluation of economic,
political and social factors, present good prospects for overall economic
growth.

Pan-European Growth Portfolio

Pan-European Growth Portfolio's main objective is long-term capital growth
through investments primarily in a diversified portfolio of equity securities
of companies located in Europe. In selecting securities, the Portfolio
emphasizes those securities that Portfolio management believes are undervalued
or have good prospects for earnings growth. Pan-European Growth Portfolio will,
under normal circumstances, invest at least 80% of its total assets in equity
securities of companies located in Europe.

Pan-European Growth Portfolio invests primarily in securities of companies
located in developed European countries, including Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands,
Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. The
Portfolio may also invest in securities of companies located in developing
European countries, including Bulgaria, the Czech Republic, Hungary, Poland,
Romania, Slovakia, and the states which formerly comprised Yugoslavia and the
Soviet Union. Pan-European Growth Portfolio does not allocate investments based
on its analysis of the overall prospects for a particular European country.

INTERNATIONAL PORTFOLIO AND PAN-EUROPEAN GROWTH PORTFOLIO

Equity securities consist of:

- Common Stock
- Preferred Stock
- Securities Convertible into Common Stock
- Derivative securities, such as options (including warrants) and
futures, the value of which is based on a common stock or group
of common stocks.

A company's stock is considered to be undervalued when the stock's current
price is less than what Portfolio management believes a share of the company is
worth. Portfolio management feels a company's worth can be assessed by several
factors such as:

- financial resources
- value of assets
- sales and earnings growth
- product development
- quality of management
- overall business prospects

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The Portfolios consider a company to be "located" in the country where:

- It is legally organized, or
- The primary trading market for its securities is located, or
- At least 50% of the issuer's (and its subsidiaries') non-current
assets, capitalization, gross revenues or profits have been
located during one of the last two fiscal years.

A company's stock may become undervalued when most investors fail to
perceive the company's strengths in one or more of these areas. A company whose
earnings per share grow faster than inflation and the economy in general
usually has a higher stock price over time than a company with slower earnings
growth. A Portfolio's evaluation of the prospects for a company's industry or
market sector is an important factor in evaluating a particular company's
earnings prospects. Current income from dividends and interest will not be an
important consideration in selecting portfolio securities for a Portfolio. Both
Portfolios may invest in companies of any size, but each Portfolio tends to
focus on medium and large companies. The Portfolios have no stated minimum
holding period for investments, and each will buy or sell securities whenever
the Portfolio's management sees an appropriate opportunity. A Portfolio does
not consider potential tax consequences to investors when it sells securities.

Each Portfolio may invest in debt securities that are issued together with
a particular equity security. Each Portfolio may invest in derivatives to hedge
(protect against price movements) or to enable it to reallocate its investments
more quickly than it could by buying and selling the underlying securities.
Each Portfolio is not required to hedge and may choose not to do so.

Each Portfolio will normally invest almost all of its assets as described
above. Each Portfolio may, however, invest in short-term instruments, such as
money market securities and repurchase agreements, to meet redemptions. Each
Portfolio may also, without limit, make short-term investments, purchase high
quality bonds or buy or sell derivatives to reduce exposure to equity
securities when the Portfolio believes it is advisable to do so (on a temporary
defensive basis). Short-term investments and temporary defensive positions may
limit the potential for growth in the value of an interest in the Portfolio,
and the Portfolio may therefore not achieve its investment objective.

U.S. LARGE CAP PORTFOLIO

U.S. Large Cap Portfolio's main objective is long-term capital growth. The
Portfolio tries to achieve its objective by investing primarily in a
diversified portfolio of equity securities of large cap companies located in
the U.S. U.S. Large Cap Portfolio may also invest up to 10% of its assets in
equity securities of companies located in Canada. In selecting securities, the
Portfolio emphasizes those securities that Portfolio management believes are
undervalued or have good prospects for earnings growth.

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U.S. Large Cap Portfolio will, under normal circumstances, invest at least
65% of its total assets in equity securities of large cap companies located in
the U.S. The Portfolio may also invest in equity securities of companies of any
market capitalization located in Canada and of small or medium capitalization
companies located in the U.S. Normally, Canadian investments will represent 10%
or less of the Portfolio's assets. A large cap company is a company whose
market capitalization is at least $5 billion under current market conditions.
The Portfolio's definition of large cap companies may be increased in response
to changes in the market. A company's market capitalization may go up or down
due to market fluctuations. The Portfolio will not sell a company's securities
because that company's market capitalization drops below $5 billion or another
amount set by the Portfolio.

Equity securities consist of:

U.S. Large Cap Portfolio considers a company to be "located" in the U.S. or
Canada if:

- It is legally organized in the U.S. or Canada, or
- The primary trading market for its securities is located in the
U.S. or Canada, or
- At least 50% of the company's (and its subsidiaries')
non-current assets, capitalization, gross revenues or profits
have been located in the U.S. or Canada during one of the last
two fiscal years.

Under this definition a "foreign" company (a company organized or trading
outside the U.S. or Canada, or with substantial operations outside the U.S. or
Canada) may be considered to be "located" in the U.S. or Canada.

- financial resources
- value of assets
- sales and earnings growth
- product development
- quality of management
- overall business prospects

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The Portfolio may invest in debt securities that are issued together with
a particular equity security. The Portfolio may invest in derivatives to hedge
(protect against price movements) or to enable it to reallocate its investments
more quickly than it could by buying and selling the underlying securities. The
Portfolio is not required to hedge and may choose not to do so.

The Portfolio has no stated minimum holding period for investments, and
will buy or sell securities whenever the Portfolio management sees an
appropriate opportunity. The Portfolio does not consider potential tax
consequences to investors when it sells securities.

The Portfolio will normally invest almost all of its assets as described
above. The Portfolio may, however, invest in short-term instruments, such as
money market securities and repurchase agreements, to meet redemptions. The
Portfolio may also, without limit, make short-term investments, purchase high
quality bonds or buy or sell derivatives to reduce exposure to equity
securities when the Portfolio believes it is advisable to do so (on a temporary
defensive basis). Short-term investments and temporary defensive positions may
limit the potential for growth in the value of an interest in the Portfolio and
the Portfolio may, therefore, not achieve its investment objective.

GOLD AND MINING PORTFOLIO

Gold and Mining Portfolio's main objective is long-term capital growth.
The Portfolio tries to achieve its objective by investing primarily in a
diversified portfolio of equity securities of gold mining companies, and, to a
lesser extent, of companies engaged in other mining activities, located
throughout the world. The Portfolio may also invest up to 10% of its assets
directly in gold bullion. In selecting securities, the Portfolio emphasizes
those securities that Portfolio management believes are undervalued or have
good prospects for earnings growth.

The Portfolio will, under normal circumstances, invest at least 80% of its
total assets in equity securities of gold mining companies, equity securities
of companies engaged in other mining activities, and gold bullion. Gold and
Mining Portfolio has a policy to concentrate its investments in companies in
the mining and related manufacturing industries. Mining related manufacturing
industries may include, for example, primary production of aluminum or steel
foundries. For simplicity, this Prospectus uses the term "mining" to include
exploring, mining, refining, processing, fabricating, distributing, dealing in
or owning a particular metal or mineral. The Portfolio will invest in companies
engaged in non-gold mining activities when Portfolio management believes, based
on an evaluation of global economic conditions

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and the price of gold, that they present better prospects for growth than
investments in gold mining companies.

Equity securities consist of:

- Common Stock
- Preferred Stock
- Securities Convertible into Common Stock
- Derivative securities, such as asset-based securities, options
(including warrants) and futures, the value of which is based on
a common stock or group of common stocks.

- financial resources
- value of assets (including the type, quantity and quality of a
company's ore reserves, and mineral exploration prospects)
- sales and earnings growth
- product development
- quality of management
- overall business prospects.

Gold and Mining Portfolio invests in securities of companies located
throughout the world and generally intends to invest a substantial amount of
its assets in securities of companies located in the Republic of South Africa.
The Portfolio may invest, without limit, in securities of companies located in
countries with emerging capital markets including the Republic of South Africa,
the People's Republic of China, Russia, Indonesia, Uzbekistan, Peru, Brazil,
Mexico, Zimbabwe, Ghana, Mali, Tanzania, the Philippines and Papua New Guinea.
The Portfolio may also invest in securities of companies located in countries
with developed capital markets including the United States, Canada, Japan,
United Kingdom, Finland, France, Germany, Switzerland, Ireland, Luxembourg,
Spain and Australia.

The Portfolio may invest in debt securities that are issued together with
a particular equity security. The Portfolio may invest in derivatives to hedge
(protect against price movements) or to

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enable it to reallocate its investments more quickly than it could by buying
and selling the underlying assets. The Portfolio is not required to hedge and
may choose not to do so.

The Portfolio may invest in companies of any size, but the Portfolio tends
to focus on medium and large companies. The Portfolio has no stated minimum
holding period for investments, and will buy or sell securities and other
assets whenever the Portfolio's management sees an appropriate opportunity. The
Portfolio does not consider potential tax consequences to investors when it
sells assets.

The Portfolio may invest up to 10% of its assets in gold bullion when the
Portfolio believes it is undervalued relative to the price of securities of
gold mining companies. However, the Portfolio may have internal guidelines that
limit its investments in gold bullion to considerably less than 10% of the
Portfolio's assets.

The Portfolio will normally invest almost all of its assets as described
above. The Portfolio may, however, invest in short-term instruments, such as
money market securities and repurchase agreements, to meet redemptions. If the
Portfolio anticipates significant adverse changes in the price of gold, then
the Portfolio's investment in stocks of gold mining companies and gold, bullion
may be temporarily reduced to below 50% of the Portfolio's total assets. In
this case the Portfolio may make substantial investments, for temporary
defensive purposes, in other mineral mining companies (non-gold), and may hold
substantial amounts of short-term investments, such as money market securities
and repurchase agreements. Short term investments and temporary defensive
positions may limit the potential for growth in the value of an interest and
the Portfolio may therefore not achieve its investment objective.

U.S. SMALL CAP GROWTH PORTFOLIO

U.S. Small Cap Growth Portfolio's main objective is long-term capital
growth. The Portfolio tries to achieve its objective by investing primarily in
a diversified portfolio of equity securities of small cap companies located in
the U.S. The Portfolio may also invest up to 10% of its assets in equity
securities of companies located in Canada. In selecting securities, the
Portfolio emphasizes those securities that Portfolio management believes have
above average prospects for earnings growth. The Portfolio may also invest in
securities that Portfolio management believes are undervalued.

U.S. Small Cap Growth Portfolio will, under normal circumstances, invest
at least 65% of its total assets in equity securities of small cap companies
located in the U.S. The Portfolio may also invest in equity securities of
companies of any market capitalization located in Canada and of medium or large
capitalization companies located in the U.S. Normally, Canadian investments
will represent 10% or less of the Portfolio's assets. A company's market
capitalization may go up or down due to market fluctuations. The Portfolio will
not sell a company's securities solely because that company's market
capitalization rises above $2 billion. Equity securities consist of:

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- Common Stock
- Preferred Stock
- Securities Convertible into Common Stock
- Derivative securities such as options (including warrants) and
futures, the value of which is based on a common stock or group
of common stocks

U.S. Small Cap Growth Portfolio considers a company to be "located" in the
U.S. or Canada if:

A company whose earnings per share grow faster than inflation and the
economy in general usually has a higher stock price over time than a company
with slower earnings growth. The Portfolio's evaluation of the prospects for a
company's industry or market sector is an important factor in evaluating a
particular company's earnings prospects. A company's stock is considered to be
undervalued when the stock's current price is less than what Portfolio
management believes a share of the company is worth. Portfolio management feels
a company's worth can be assessed by several factors, such as:

- sales and earnings growth
- quality of management
- financial resources
- product development
- overall business prospects
- position to take advantage of new technologies or emerging
industries
- value of assets

A company's stock may become undervalued when most investors fail to
perceive the company's strengths in one or more of these areas. Current income
from dividends and interest will not be an important consideration in selecting
portfolio securities. The Portfolio may invest in debt securities

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that are issued together with a particular equity security. The Portfolio may
invest in derivatives to hedge (protect against price movements) or to enable
it to reallocate its investments more quickly than it could by buying and
selling the underlying securities. The Portfolio is not required to hedge and
may choose not to do so. The Portfolio may also purchase securities in initial
public offerings.

The Portfolio has no stated minimum holding period for investments, and
will buy or sell securities whenever Portfolio management sees an appropriate
opportunity. The Portfolio may engage in active and frequent trading of its
investments. Frequent trading will increase the Portfolio's commission costs,
and may increase taxable dividends. The Portfolio does not consider potential
tax consequences to Portfolio shareholders when it sells securities.

The Portfolio will normally invest almost all of its assets as described
above. The Portfolio may, however, invest in short-term instruments, such as
money market securities and repurchase agreements, to meet redemptions. The
Portfolio may also, without limit, make short-term investments, purchase high
quality bonds or buy or sell derivatives to reduce exposure to equity
securities when the Portfolio believes it is advisable to do so (on a temporary
defensive basis). Short term investments and temporary defensive positions may
limit the potential for growth in the value of your shares and the Portfolio
may, therefore, not achieve its investment objective.

SELECT GROWTH PORTFOLIO

The Select Growth Portfolio's objective is capital appreciation. The
Portfolio tries to achieve its objective by investing primarily in a
diversified portfolio of common stocks and other equity securities of companies
that are traded in the U.S. securities markets that, at the time of purchase,
have market capitalizations of at least $10 billion ("very large cap
companies") and that the Portfolio's management believes to have strong
earnings growth potential. The Portfolio may also purchase securities of mid
and large cap U.S. companies (companies whose total market capitalization is at
least $1 billion and $5 billion, respectively) that Portfolio management
believes offer strong earnings growth potential. The Portfolio seeks to
purchase securities that are well diversified across economic sectors. The
Russell Top 200 Growth Index is the Portfolio's current benchmark. Of course,
there is no guarantee that the Portfolio will achieve its investment goal.

The Select Growth Portfolio will, under normal circumstances, invest at
least 65% of its total assets in equity securities of very large cap companies
that are traded in the U.S. securities markets, including common stock,
preferred stock, warrants and other instruments. The Portfolio will only
purchase securities that are traded on registered exchanges or the
over-the-counter market in the United States. The Portfolio generally invests
no more than 2% of its assets in any single issue. However, if a security
comprises between 1% and 5% of the Russell Top 200 Growth Index, the Portfolio
may devote a percentage of its assets to that security up to two times its
weighting in the Index, and for any security that comprise more than 5% of the
Index, up to 1 1/2 times its Index weighting.

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A company whose earnings per share grow faster than inflation and the
economy in general usually has a higher stock price over time than a company
with slower earnings growth. The Select Growth Portfolio's evaluation of the
prospects for a company's industry or market sector is an important factor in
evaluating a particular company's earnings prospects. Current income from
dividends and interest will not be an important consideration in selecting
portfolio securities.

The Select Growth Portfolio has no stated minimum holding period for
investments, and will buy or sell securities whenever Portfolio management sees
an appropriate opportunity. For example, the Portfolio may sell shares of a
company when the company's earnings prospects deteriorate or when the
Portfolio's subadviser identifies another company with stronger earnings growth
prospects.

The Select Growth Portfolio does not consider potential tax consequences
to Portfolio shareholders when it sells securities. Because the Portfolio has
the flexibility to take advantage of short term investment opportunities, it
may experience relatively high portfolio turnover during certain periods. This
may result in higher transaction costs and reduce the Portfolio's overall
performance, and may result in additional capital gains tax liabilities for
shareholders.

The Select Growth Portfolio may also make the following additional
investments. The Portfolio may invest up to 10% of its total assets in American
Depositary Receipts, or "ADRs". The Portfolio may invest in debt securities
that are issued together with a particular equity security. The Portfolio may
invest in derivatives to hedge (protect against price movements) or to enable
it to reallocate its investments more quickly than it could by buying and
selling the underlying securities. The Portfolio is not required to hedge and
may choose not to do so.

The Select Growth Portfolio will normally invest almost all of its
assets as described above. The Portfolio may, however, invest up to 100% of its
assets in short-term obligations (such as money market instruments, including
U.S. Government securities, bank obligations, high quality commercial paper and
repurchase agreements involving the foregoing securities), cash and shares of
money market investment companies, that would not ordinarily be consistent with
the Portfolio's objectives when it would be advisable to do so (during unusual
economic or market conditions, or for temporary defensive purposes). In
addition, the Portfolio may invest in such instruments to enable it to meet
redemptions. The Portfolio will do so only if management believes that the risk
of loss from its usual investments outweighs the opportunity for gains.
Short-term investments and temporary defensive positions may limit the
potential for growth in the value of your shares and the Portfolio may,
therefore, not achieve its investment objective.

The Portfolios may use many different investment strategies in seeking
their investment objectives, and each Portfolio has certain investment
restrictions. These strategies and certain of the

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restrictions and policies governing each Portfolio's investments are explained
in Part B of this Registration Statement.

INVESTMENT RISKS.

This section contains a summary discussion of the general risks of
investing in a Portfolio. As with any mutual fund, there can be no guarantee
that a Portfolio will meet its goals, or that a Portfolio's performance will be
positive over any period of time.

INTERNATIONAL PORTFOLIO, PAN-EUROPEAN GROWTH PORTFOLIO
AND GOLD AND MINING PORTFOLIO

Liquidity, Information and Valuation Risks.

Certain securities, including securities of companies in countries with
emerging capital markets, securities of small companies and "restricted
securities" may be illiquid or volatile, making it difficult or impossible to
sell them at the time and at the price that a Portfolio would like. Restricted
securities have contractual or legal restrictions on their resale and include
"private placement" securities that a Portfolio may buy directly from the
issuer. Also, important information about certain companies, securities or the
markets in which they trade, may be inaccurate or unavailable. It may be
difficult to value accurately these types of securities. Certain derivatives
may be subject to these risks as well.

European Economic and Monetary Union (EMU)

Certain European countries have entered into EMU, in an effort to, among
other things, reduce barriers between countries, increase competition among
companies, reduce government subsidies in certain industries, and reduce or
eliminate currency fluctuations among these countries. EMU has established a
single common European currency (the "euro") which was introduced on January 1,
1999 and has replaced the existing national currencies of all initial EMU
participants. The use of notes and coins of the relevant national currencies
will be phased out by July 1, 2002. Upon introduction of the euro, certain
securities (beginning with government and corporate bonds) were redenominated
in the euro. These securities trade and make dividend and other payments only
in euros. Like other investment companies and business organizations, including
the companies in which the Fund invests, the Fund could be adversely affected:

- If the transition to euro, or EMU as a whole, does not continue to
proceed as planned. For example, sharp currency fluctuations,
exchange rate volatility, and other disruptions of the markets could
occur.

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- If a participating country withdraws from EMU and, for example, if
securities redenominated in euros are transferred back into that
country's national currency.

Other Foreign Security Risks

- The value of each Portfolio's non-U.S. holdings (and hedging
transactions in foreign currencies) will be affected by changes in
currency exchange rates.

- The costs of non-U.S. securities transactions tend to be higher than
those of U.S. transactions.

- A Portfolio's non-U.S. securities holdings may be adversely affected
by U.S. or foreign government action.

- International trade barriers or economic sanctions against certain
non-U.S. countries may adversely affect a Portfolio's non-U.S.
holdings.

- A Portfolio may be able to invest in certain small non-U.S. markets
only by investing in another fund that in turn invests in those
markets. It may cost a Portfolio more to buy shares of these funds
than it would to buy the non-U.S. securities directly.

- The foregoing risks are heightened when the investment is made in a
country that has an emerging capital market. The development of a
capital market depends on a number of factors, including a country's
success in making political, economic and social reforms. If a
country were to discontinue its process of reform, or experience
other destabilizing events, a Portfolio's investments could be
adversely affected. In addition, because of the small size of the
capital market in a country with an emerging capital market or
governmental restrictions on foreign investment, there may be fewer
investment opportunities available to a Portfolio than in more
developed markets. This could limit a Portfolio's ability to
diversify its holdings among issuers, industries and countries.

- If a Portfolio purchases a bond issued by a foreign government, the
government may be unwilling or unable to make payments when due.
There may be no formal bankruptcy proceeding by which a Portfolio
would be able to collect amounts owed by a foreign government.

- Non-U.S. markets have different clearance and settlement procedures,
and in certain markets settlements may be unable to keep pace with
the volume of securities transactions which may cause delays. This
means that a Portfolio's assets may be

<PAGE>

uninvested and not earning returns. A Portfolio may miss investment
opportunities or be unable to dispose of a security because of these
delays.

U.S. LARGE CAP PORTFOLIO AND U.S. SMALL CAP GROWTH PORTFOLIO

Canadian Investment Risk

Canadian investment risk is the risk that each Portfolio's Canadian
securities may go up or down in value depending on fluctuations in the relative
exchange rates of the U.S. dollar and the Canadian dollar, U.S. and Canadian
political and economic developments, and changes in U.S. and Canadian laws
relating to investments in Canada.

Liquidity, Information and Valuation Risks.

Certain securities, including securities of small companies, securities of
Canadian companies and "restricted securities," may be illiquid or volatile,
making it difficult or impossible to sell them at the time and at the price
that a Portfolio would like. Restricted securities have contractual or legal
restrictions on their resale and include "private placement" securities that a
Portfolio may buy directly from the issuer. Also, important information about
certain companies, securities or the markets in which they trade, may be
inaccurate or unavailable. It may be difficult to value accurately these types
of securities. Certain derivatives may be subject to these risks as well.

Other Canadian Securities Risks

Canadian securities are sensitive to conditions within Canada, but also
tend to follow the U.S. market. Canada's economy depends heavily on exports to
the U.S., Canada's largest trading partner. The Canadian economy relies
strongly on the production and processing of natural resources. Historically,
natural resource prices have been volatile. Demand by many citizens of the
Province of Quebec for secession from Canada may significantly impact the
Canadian economy.

- The costs of Canadian securities transactions tend to be higher than
those of U.S. transactions.

- The Canadian securities market has different clearance and settlement
procedures, which may case delays. This means that a Portfolio's
assets may be uninvested and not earning returns. A Portfolio may
miss investment opportunities or be unable to dispose of a security
because of these delays.

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Foreign Securities Risks

The U.S. Large Cap Portfolio and the U.S. Small Cap Growth Portfolio
define companies located in the U.S. or Canada broadly. As a result, each
Portfolio's investments may include companies organized, traded or having
substantial operations outside the U.S. or Canada. This may expose each
Portfolio to risks associated with foreign investments.

- The value of holdings traded outside the U.S. (and any hedging
transactions in foreign currencies) will be affected by changes in
currency exchange rates.

- The costs of non-U.S. securities transactions tend to be higher than
those of U.S. transactions.

- The Portfolio's holdings may be adversely affected by U.S. or
non-U.S. government action.

- International trade barriers or economic sanctions against certain
non-U.S. countries may adversely affect these holdings.

GOLD AND MINING PORTFOLIO

Sector Risk

Sector risk is the risk that the Fund's concentration in gold and other
mining securities will expose the Fund more to the price fluctuations of mining
securities generally or of gold in particular than more broadly diversified
funds.

Mining Related Securities and Gold Bullion

- Investments in or relating to gold and other metals or minerals are
considered speculative.

- Historically, during periods of economic or financial instability the
securities of mining companies in general, and companies engaged in
precious (including gold) and industrial metals mining in particular,
have been subject to extreme fluctuations in market price. Gold
bullion has also been subject to extreme fluctuations in market
price.

- The earnings and general financial condition of mining companies are
highly dependent on the market prices of the underlying metals or
minerals, which have historically been extremely volatile.

- During periods of instability in the price of metals or minerals, the
liquidity of the Portfolio's portfolio securities may be severely
reduced; in other words, the Portfolio

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<PAGE>

may not, during these periods, be able to sell its securities at the
time and price that the Portfolio would like.

- Actions of large producers, sellers, and holders of precious metals
(such as governments and central banks) may severely impact supply
of, or demand for, precious metals, and their actions in general may
have a significant impact on the prices of precious metals. These
actions can be affected by various economic, financial, social and
political factors which may be unpredictable.

- The Portfolio generally intends to invest a substantial amount of its
assets in securities of companies located in the Republic of South
Africa. This investment focus could increase volatility and risk
compared to a fund that invests a smaller percentage of its assets in
South Africa. In addition, South African companies are generally more
sensitive to movements in the price of gold than similar companies in
other countries.

- Gold bullion does not generate income and offers only the potential
for capital appreciation or depreciation.

U.S. SMALL CAP GROWTH PORTFOLIO

Small Cap Risk

Small cap risk is the specific risk associated with investment in small
cap companies. Small cap companies may have limited product lines or markets.
They may be less financially secure than larger, more established companies.
They may depend on a small number of key personnel. If a product fails, or if
management changes, or there are other adverse developments, the Portfolio's
investment in a small cap company may lose substantial value.

Small cap securities generally trade in lower volumes and are subject to
greater and more unpredictable price changes than larger cap securities or the
stock market as a whole. Moreover, small cap securities generally are not
income-producing investments and thus, do not cushion a portfolio's total
return from price changes.

Growth Style Investing Risk

Growth style investing may go in and out of favor. Small cap companies are
expected to have superior earnings growth and any disappointment in earnings or
growth can mean a substantial decline in the share price.

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Initial Public Offering Risk

The volume of initial public offerings and the levels at which the newly
issued stocks trade in the secondary market are affected by the performance of
the stock market overall. If initial public offerings are brought to the
market, availability may be limited and the Portfolio may not be able to buy
any shares at the offering price, or if it is able to buy shares, it may not be
able to buy as many shares at the offering price as it would like. In addition,
the prices of securities involved in initial public offerings are often subject
to greater and more unpredictable price changes than more established stocks.

SELECT GROWTH PORTFOLIO

Very Large Cap Company Sector Risk

The Select Growth Portfolio is subject to the risk that its principal
market segment, very large capitalization growth stocks, may underperform
compared to other market segments or to the equity markets as a whole.

ALL PORTFOLIOS

Market and Selection Risk

Market risk is the risk that the stock markets in which a Portfolio
invests will go down in value, including the possibility that the stock markets
will go down sharply and unpredictably. Selection risk is the risk that the
investments that Portfolio management selects will underperform the stock
markets or other portfolios with similar investment objectives and investment
strategies.

Borrowing and Leverage

The use of borrowing can create leverage. Leverage increases the
Portfolio's exposure to risk by increasing its total investments. If the
Portfolio borrows money to make more investments than it otherwise could or to
meet redemptions, and the Portfolio's investments go down in value, the
Portfolio's losses will be magnified. Borrowing will cost the Portfolio
interest expense and other fees.

Certain securities that a Portfolio buys may create leverage, including,
for example, derivative securities. Like borrowing, these investments may
increase a Portfolio's exposure to risk.

Derivatives

A Portfolio may use derivative instruments, including futures, forwards,
options, indexed and inverse securities and swaps. Derivatives may allow a
Portfolio to increase or decrease its level of risk exposure more quickly and
efficiently than other types of instruments.

Derivatives are volatile and involve significant risks, including:

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<PAGE>

- Credit risk -- the risk that the counterparty (the party on the other
side of the transaction) on a derivative transaction will be unable
to honor its financial obligation to a Portfolio.

- Currency risk -- the risk that changes in the exchange rate between
currencies will adversely affect the value (in U.S. dollar terms) of
an investment.

- Leverage risk -- the risk associated with certain types of
investments or trading strategies (such as borrowing money to
increase the amount of investments) that relatively small market
movements may result in large changes in the value of an investment.
Certain investments or trading strategies that involve leverage can
result in losses that greatly exceed the amount originally invested.

- Liquidity risk -- the risk that certain securities may be difficult
or impossible to sell at the time that the seller would like or at
the price that the seller believes the security is currently worth.

A Portfolio may use derivatives for hedging purposes, including anticipatory
hedges. Hedging is a strategy in which a Portfolio uses a derivative to offset
the risk that other Portfolio holdings may decrease in value. While hedging can
reduce losses, it can also reduce or eliminate gains if the market moves in a
different manner than anticipated by the Portfolio or if the cost of the
derivative outweighs the benefit of the hedge. Hedging also involves the risk
that changes in the value of the derivative will not match those of the
holdings being hedged as expected by the Portfolio, in which case any losses on
the holdings being hedged may not be reduced. There can be no assurance that a
Portfolio's hedging strategy will reduce risk or that hedging transactions will
be either available or cost effective. The Portfolios are not required to use
hedging and may choose not to do so.

The Gold and Mining Portfolio may also use asset-based securities.

Convertible Securities

Convertible securities, including bonds and preferred stock, are
convertible into common stock. As a result of the conversion feature, the
interest or dividend rate on a convertible security is generally less than
would be the case if the security were not convertible. The value of a
convertible security will be affected both by its stated interest or dividend
rate and the value of the underlying common stock. Therefore, its value will be
affected by the factors that affect both debt securities (such as interest
rates) and equity securities (such as stock market movement generally). Some
convertible securities might require a Portfolio to sell the securities back to
the issuer or a third party at a time that is disadvantageous to the Portfolio.

<PAGE>

Debt Securities

Debt securities, such as bonds, involve credit risk. This is the risk that
the borrower will not make timely payments of principal and interest. The
degree of credit risk depends on the issuer's financial condition and on the
terms of the bonds. These securities are also subject to interest rate risk.
This is the risk that the value of the security may fall when interest rates
rise. In general, the market price of debt securities with longer maturities
will go up or down more in response to changes in interest rates than the
market price of shorter term securities.

If you would like further information about the Portfolios, including how
they invest, please see Part B.

ITEM 6. MANAGEMENT, ORGANIZATION, AND CAPITAL STRUCTURE.

INVESTMENT ADVISER.

Mercury Asset Management International Ltd. ("Mercury") manages the
International Portfolio, Pan-European Growth Portfolio, Gold and Mining
Portfolio, and U.S. Large Cap Portfolio. Mercury Asset Management US, a
division of Fund Asset Management, L.P. ("FAM") manages the Mercury Master U.S.
Small Cap Growth Portfolio and the Mercury Master Select Growth Portfolio.
Mercury and Mercury Asset Management US are each referred to herein as the
"Investment Adviser." Each Investment Adviser manages each Portfolio's
investments under the overall supervision of the Board of Trustees of the
Mercury Asset Management Master Trust. Each Investment Adviser and its
affiliates (in the case of the Select Growth Portfolio, its subadviser, Turner
Investment Partners, Inc.) have the responsibility for making all investment
decisions for each Portfolio.

As of May 31, 2000 the Investment Advisers and their affiliates manage
portfolios with over $555 billion in assets for individuals and institutions
seeking investments worldwide. This amount includes assets managed for the
Investment Advisers' affiliates. Of this amount, Mercury manages a total of
approximately $2.9 billion in investment company assets and FAM manages a total
of approximately $158.3 billion in investment company assets. The advisory
agreement between the Trust on behalf of each Portfolio and the Investment
Adviser gives the Investment Adviser the responsibility for making all
investment decisions.

With respect to International Portfolio, Pan-European Growth Portfolio,
and Gold and Mining Portfolio, the Investment Adviser is paid at the rate of
.75% of the Portfolio's average daily net assets. With respect to U.S. Large
Cap Portfolio and Select Growth Portfolio, the Investment Adviser is paid at
the rate of .50% of the Portfolio's average daily net assets. With respect to
U.S. Small Cap Growth Portfolio, the Investment Adviser is paid at the rate of
.70% of the Portfolio's average daily net assets.

Fund Asset Management L.P., an affiliate of Mercury, may manage all or a
portion of the International Portfolio, the Pan-European Growth Portfolio, the
U.S. Large Cap Portfolio and the Gold

<PAGE>

and Mining Portfolio's daily cash assets, to the extent not managed by Mercury.
These Portfolios do not pay any incremental fee for this service, although
Mercury may make payments to Fund Asset Management, L.P. Mercury, an affiliate
of Mercury Asset Management US, may provide assistance to Mercury Asset
Management US in managing the U.S. Small Cap Growth Portfolio or may manage all
or a portion of the U.S. Small Cap Growth Portfolio to the extent not managed
by Mercury Asset Management US. The U.S. Small Cap Growth Portfolio does not
pay any incremental fee for this service, although Mercury Asset Management US
may make payments to Mercury.

With respect to the Select Growth Portfolio, pursuant to a sub-advisory
agreement with Mercury Asset Management US, Turner Investment Partners, Inc.
("Turner Partners") is currently the Portfolio's subadviser. Mercury Asset
Management US pays Turner Partners from the advisory fees it receives from the
Select Growth Portfolio. Turner Partners makes investment decisions for the
Portfolio and continuously reviews, supervises and administers the Portfolio's
investment programs. Turner Partners also ensures compliance with the
Portfolio's investment policies and guidelines.

From its commencement of operations on February 1, 1997 until its
reorganization in June, 2000, the Mercury Select Growth Fund operated as the
Turner Large Cap Growth Equity Fund, a portfolio of the TIP Funds. During that
period, Turner Partners was the investment adviser to the Turner Large Cap
Growth Equity Fund. For Turner Large Cap Growth Equity Fund's fiscal year ended
September 30, 1999, Turner Partners waived/reimbursed expenses at the rate of
.66% of the fund's average daily net assets. As of March 31, 2000, Turner
Partners had approximately $9.547 billion in assets under management.

Turner Partners manages the Select Growth Portfolio's investments through
a committee of investment professionals comprised of Robert Turner, John
Hammerschmidt and Mark Turner. The background of each committee member is set
forth below.

Robert E. Turner, CFA, Chairman and Chief Investment Officer of Turner
Partners, is lead manager of the Portfolio. Mr. Turner also manages other
investment funds and accounts. Mr. Turner founded Turner Partners in 1990.
Prior to 1990, he was Senior Investment Manager with Meridian Investment
Company. He has 19 years of investment experience.

John Hammerschmidt, Senior Equity Portfolio Manager of Turner Partners, is
co-manager of the Portfolio. Mr. Hammerschmidt also manages other investment
funds and accounts. Mr. Hammerschmidt joined Turner Partners in 1992. Prior to
1992, he was Vice President in Government Securities Trading at S.G. Warburg.
He has 17 years of investment experience.

Mark Turner, Vice Chairman of Turner Partners, is co-manager of the
Portfolio. Mr. Turner also manages other investment funds and accounts. Mr.
Turner co-founded Turner Partners in 1990. Prior to 1990, he was Vice President
and Senior Portfolio Manager with First Maryland Asset Management. He has 18
years of investment experience.

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<PAGE>

International Portfolio is managed by members of a team of 18 investment
professionals who participate in the team's research process and stock
selection. The senior investment professionals in this group that have managed
the International Portfolio since the Portfolio started operations include:

Claus Anthon, Director of Mercury Asset Management, has been employed as
an investment professional by the Investment Adviser or its Mercury affiliates
since 1982. Tammy Chow, Associate Director of Mercury Asset Management, has
been employed as an investment professional by the Investment Adviser or its
Mercury affiliates since 1994.

Gary Lowe, Managing Director of Mercury Asset Management, has been
employed as an investment professional by the Investment Adviser or its Mercury
affiliates since 1992.

Juliet Marber, Director of Mercury Asset Management, has been employed as
an investment professional by the Investment Adviser or its Mercury affiliates
since 1987.

Charles Prideaux, Managing Director of Mercury Asset Management, has been
employed as an investment professional by the Investment Adviser or its Mercury
affiliates since 1988. Mr. Prideaux is primarily responsible for the day-to-day
management of the International Portfolio.

Manraj Sekhon, Fund Manager of Mercury Asset Management, has been employed
as an investment professional by the Investment Adviser or its Mercury
affiliates since 1994.

Pan-European Growth Portfolio is managed by members of a team of 26
investment professionals who participate in the team's research process and
stock selection. The senior investment professionals in this group that have
managed the Pan European Growth Portfolio since the Portfolio started
operations include:

Simon Flood, Director of Mercury Asset Management, has been employed as an
investment professional by the Investment Adviser or its Mercury affiliates
since 1989.

Samuel Joab, Director of Mercury Asset Management, has been employed as an
investment professional by the Investment Adviser or its Mercury affiliates
since 1992.

Michel Legros, Managing Director of Mercury Asset Management, has been
employed as an investment professional by the Investment Adviser or its Mercury
affiliates since 1991.

Andreas Utermann, Managing Director of Mercury Asset Management, has been
employed as an investment professional by the Investment Adviser or its Mercury
affiliates since 1990. Mr. Utermann is primarily responsible for the day-to-day
management of the Pan-European Growth Portfolio.

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<PAGE>

Charlotte Winther, Associate Director of Mercury Asset Management, has
been employed as an investment professional by the Investment Adviser or its
Mercury affiliates since 1998. Ms. Winther was employed at Unibank Asset
Management from 1989 to 1998.

U.S. Large Cap Portfolio is managed by members of a team of 17 investment
professionals who participate in the team's research process and stock
selection. The senior investment professionals in this group that have managed
the Portfolio since the Portfolio started operations include:

Garrett Fish, Associate Director of Mercury Asset Management, has been
employed as an investment professional by the Investment Adviser or its Mercury
affiliates since 1997. Mr. Fish was employed at Jardine Fleming Hong Kong as a
U.S. fund manager from 1994 to 1997. From 1991 to 1993 Mr. Fish was an account
manager at Aetna Capital Management in the U.S.

Andrew J. Hudson, Managing Director of Mercury Asset Management, has been
employed as an investment professional by the Investment Adviser or its Mercury
affiliates since 1992.

Michael Morony, Director of Mercury Asset Management, has been employed as
an investment professional by the Investment Adviser or its Mercury affiliates
since 1997. Mr. Morony worked for Threadneedle Investment Managers from 1992 to
1997. Mr. Morony is primarily responsible for the day-to-day management of the
Portfolio.

Gold and Mining Portfolio is managed by members of a team of 7 investment
professionals who participate in the team's research process and stock
selection. The senior investment professionals in the group that have managed
the Portfolio since the Portfolio started operations include:

David Baker, Director of Mercury Asset Management, has been employed as an
investment professional by the Investment Adviser or its Mercury affiliates
since 1992.

Graham Birch, Managing Director of Mercury Asset Management, has been
employed as an investment professional by the Investment Adviser or its Mercury
affiliates since 1993.

Geoff Campbell, Director of Mercury Asset Management, has been employed as
an investment professional by the Investment Adviser or its Mercury affiliates
since 1994. Mr. Campbell was employed at Ord Minnett and Fleming Martin from
1988 to 1994. Both of these firms are divisions of Robert Fleming.

Trevor Steel, Associate Director of Mercury Asset Management, has been
employed as an investment professional by the Investment Adviser or its Mercury
affiliates since 1991. Mr. Steel is primarily responsible for the day to day
management of the Portfolio.

U.S. Small Cap Growth Portfolio is managed by the U.S. Small Cap team,
which consists of three investment professionals who are responsible for
research and stock selection for the Portfolio.

<PAGE>

The investment professionals in this group that have managed the Portfolio
since the Portfolio started operations include:

James A. Skinner, III, Associate Director of Mercury Asset Management, is
primarily responsible for the day-to-day management of the Portfolio. Mr.
Skinner has been employed as an investment professional by the Investment
Adviser or its Mercury affiliates since 1994.

Oliver Ruppert has been employed as an investment professional by the
Investment Adviser or its Mercury affiliates since 1997. Zahid Ali has been
employed as an investment professional by the Investment Adviser or its Mercury
affiliates since 1996.

CAPITAL STOCK

Investors in the Trust have no preemptive or conversion rights and
beneficial interests in the Trust are fully paid and non-assessable. The Trust
has no current intention to hold annual meetings of investors, except to the
extent required by the Investment Company Act, but will hold special meetings
of investors, when in the judgment of the Trustees, it is necessary or
desirable to submit matters for an investor vote. Upon liquidation of the Trust
or Portfolio, investors would be entitled to share, in proportion to their
investment in the Trust or the Portfolio (as the case may be), in the assets of
the Trust or Portfolio available for distribution to investors.

The Trust is organized as a Delaware business trust and currently consists
of twenty-seven Portfolios. Each investor is entitled to a vote in proportion
to its investment in the Trust or the Portfolio (as the case may be). Investors
in a Portfolio will participate equally in accordance with their pro rata
interests in the earnings, dividends and assets of the particular Portfolio.
The Trust reserves the right to create and issue interests in additional
Portfolios.

Investments in the Trust may not be transferred, but an investor may
withdraw all or any portion of its investment in any Portfolio at net asset
value on any day on which the New York Stock Exchange is open.

ITEM 7. SHAREHOLDER INFORMATION.

PRICING.

Each Portfolio calculates its net asset value (generally by using market
quotations) each day the New York Stock Exchange is open ("Pricing Day"), prior
to the close of business on the Exchange (the New York Stock Exchange generally
closes at 4:00 p.m. Eastern time). The net asset value used in determining the
price of an interest in the Portfolio is the one calculated after the purchase
or redemption order is received. The net asset value is determined by deducting
the amount of the Portfolio's total liabilities from the value of its total
assets. Net asset value is generally calculated by valuing each security at its
closing price for the day. Many of the International Portfolio's,

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<PAGE>

Pan-European Growth Portfolio's and Gold and Mining Portfolio's investments are
traded on non-U.S. securities exchanges that close many hours before the New
York Stock Exchange. Events that could affect securities prices that occur
between these times normally are not reflected in a Portfolio's net asset
value. Non-U.S. securities sometimes trade on days that the New York Stock
Exchange is closed. As a result, a Portfolio's net asset value may change on
days when an investor will not be able to purchase or redeem the Portfolio's
shares. If an event occurs after the close of a non-U.S. exchange that is
likely to significantly affect a Portfolio's net asset value, "fair value"
pricing may be used. This means that a Portfolio may value its foreign holdings
at prices other than their last closing prices, and the Portfolio's net asset
value will reflect this. Securities and assets for which market quotations are
not readily available are also valued at fair value as determined in good faith
by or under the direction of the Board of Trustees.

Each investor in the Trust may add to or reduce its investment in a
Portfolio on each Pricing Day. The value of each investor's beneficial interest
in a Portfolio will be determined by multiplying the net asset value of the
Portfolio by the percentage, effective for that day, that represents that
investor's share of the aggregate beneficial interests in such Portfolio. Any
additions or withdrawals, which are to be effected on that day, will then be
effected. The investor's percentage of the aggregate beneficial interests in a
Portfolio will then be re-computed as the percentage equal to the fraction (i)
the numerator of which is the value of such investor's investment in the
Portfolio as of the time of determination on such day plus or minus, as the
case may be, the amount of any additions to or withdrawals from the investor's
investment in the Portfolio effected on such day and (ii) the denominator of
which is the aggregate net asset value of the Portfolio as of such time on such
day plus or minus, as the case may be, the amount of the net additions to or
withdrawals from the aggregate investments in the Portfolio by all investors in
the Portfolio. The percentage so determined will then be applied to determine
the value of the investor's interest in such Portfolio prior to the close of
business of the New York Stock Exchange on the next Pricing Day of the
Portfolio.

PURCHASE OF SECURITIES

Beneficial interests in the Trust are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. Investments in each Portfolio of the Trust may
only be made by a limited number of institutional investors including
investment companies, common or commingled trust funds, group trusts, and
certain other "accredited investors" within the meaning of Regulation D under
the 1933 Act. This Registration Statement does not constitute an offer to sell,
or the solicitation of an offer to buy, any "security" within the meaning of
the 1933 Act.

There is no minimum initial or subsequent investment in each Portfolio.
However, because each Portfolio intends to be as fully invested at all times as
is reasonably consistent with its investment objectives and policies in order
to enhance the return on its assets, investments must be made in federal

<PAGE>

funds (i.e., monies credited to the account of the respective Portfolio's
custodian bank by a Federal Reserve Bank).

Each Portfolio reserves the right to cease accepting investments at any
time or to reject any investment order.

REDEMPTION.

An investor in the Trust may withdraw all or a portion of its investment
in any Portfolio on any Pricing Day at the net asset value next determined
after a withdrawal request in proper form is furnished by the investor to the
Portfolio. The proceeds of the withdrawal will be paid by the Portfolio
normally on the business day on which the withdrawal is effected, but in any
event within seven days. Investments in any Portfolio of the Trust may not be
transferred.

TAX CONSEQUENCES.

Under the anticipated method of operation of the Portfolios, each
Portfolio will be treated as a separate partnership for tax purposes and, thus,
will not be subject to any income tax. Based upon the status of each Portfolio
as a partnership, each investor in a Portfolio will be taxable on its share (as
determined in accordance with the governing instruments of the Portfolio) of
such Portfolio's ordinary income and capital gain in determining its income tax
liability. The determination of such share will be made in accordance with the
Internal Revenue Code of 1986, as amended (the "Code") and Treasury Regulations
promulgated thereunder.

It is intended that each Portfolio's assets, income and distributions will
be managed in such a way that an investor in any Portfolio will be able to
satisfy the requirements of Subchapter M of the Code assuming that the investor
invested all of its assets in the Portfolio.

A NOTE ABOUT YEAR 2000

As the year 2000 began, there were few problems caused by the inability of
certain computer systems to tell the difference between the year 2000 and the
year 1900 (commonly known as the "Year 2000 Problem"). It is still possible
that some computer systems could malfunction in the future because of the Year
2000 Problem or as a result of actions taken to address the Year 2000 Problem.
The Portfolios' management does not anticipate that its services or those of
the Portfolios' other service providers will be adversely affected, but the
Portfolios' management will continue to monitor the situation. If malfunctions
related to the Year 2000 Problem do arise, the Portfolios and their investments
could be negatively affected.

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ITEM 8. DISTRIBUTION ARRANGEMENTS.

Investments in a Portfolio will be made without a sales load. All
investments are made at net asset value next determined after an order is
received by the Portfolio. The net asset value of each Portfolio is determined
on each Pricing Day.

The Trust's placement agent is Mercury Funds Distributor, a division of
Princeton Funds Distributor, Inc.

<PAGE>

PART B

Except as otherwise indicated herein, all capitalized terms shall have the
meaning assigned to them in Part A hereof.

ITEM 10. COVER PAGE AND TABLE OF CONTENTS

Mercury Master International Portfolio ("International Portfolio"), Mercury
Master Pan-European Growth Portfolio ("Pan-European Growth Portfolio"), Mercury
Master U.S. Large Cap Portfolio ("U.S. Large Cap Portfolio"), Mercury Master
Gold and Mining Portfolio ("Gold and Mining Portfolio"), Mercury Master U.S.
Small Cap Growth Portfolio ("U.S. Small Cap Growth Portfolio") and Mercury
Master Select Growth Portfolio ("Select Growth Portfolio") (together, the
"Portfolios" and each, a "Portfolio") are each separate series of Mercury Asset
Management Master Trust (the "Trust"). This Statement of Additional Information
is not a Prospectus and should be read in conjunction with the Prospectus of the
Portfolios, dated June 19, 2000 (the "Prospectus").

This Registration Statement has been prepared as a single document
consisting of Parts A, B and C, none of which are to be used or distributed as a
stand alone document. This Registration Statement has been filed with the
Securities and Exchange Commission and can be obtained, without charge, by
calling the Trust at 1-888-763-2260, or by writing to Mercury Asset Management
Master Trust, P.O. Box 9011, Princeton, New Jersey 08543-9011. The financial
statements which relate to the International Portfolio, Pan-European Growth
Portfolio, U.S. Large Cap Portfolio and Gold and Mining Portfolio are
incorporated in this Statement of Additional Information by reference to their
1999 annual reports and November 1999 semi-annual reports to shareholders. In
addition, the financial statements which relate to the U.S. Small Cap Growth
Portfolio are incorporated by reference to its November 1999 semi-annual report
to shareholders. You may request copies of the annual and semi-annual reports at
no charge by calling 1-888-763-2260 between 8:00 a.m. and 8:00 p.m. on any
business day. In addition, the Prospectus and Statement of Additional
Information included in Amendment No. 5 to the Registrant's Registration
Statement, dated March 3, 2000, which relate to the Mercury Master Global
Balanced Portfolio, are incorporated by reference into this Statement of
Additional Information.

A consolidated table of contents for this Registration Statement is
included on page 1.

The date of this Statement of Additional Information is June 19, 2000.

ITEM 11. TRUST HISTORY.

The Trust is a Delaware business trust organized on April 23, 1998.
International Portfolio, Pan-European Growth Portfolio, U.S. Large Cap
Portfolio, Gold and Mining Portfolio, U.S. Small Cap Growth Portfolio, and
Select Growth Portfolio are each separate series of the Trust.

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ITEM 12. DESCRIPTION OF THE PORTFOLIOS AND THEIR INVESTMENTS AND
RISKS.

INVESTMENT OBJECTIVES, STRATEGIES AND RISKS.

International Portfolio's investment objective is long-term capital growth
through investments primarily in a diversified portfolio of equity securities of
companies located outside the United States.

Pan-European Growth Portfolio's investment objective is long-term capital
growth through investments primarily in a diversified portfolio of equity
securities of companies located in Europe.

U.S. Large Cap Portfolio's investment objective is long-term capital
growth. The Portfolio tries to achieve its objective by investing primarily in a
diversified portfolio of equity securities of large cap companies located in the
U.S. The Portfolio may also invest up to 10% of its assets in equity securities
of companies of any market capitalization located in Canada.

Gold and Mining Portfolio's investment objective is long-term capital
growth. The Portfolio tries to achieve its objective by investing primarily in a
diversified portfolio of equity securities of gold mining companies and, to a
lesser extent, of companies engaged in other mining activities located
throughout the world. The Portfolio may also invest directly in gold bullion.

U.S. Small Cap Growth Portfolio's investment objective is long-term capital
growth. The Portfolio tries to achieve its objective by investing primarily in a
diversified portfolio of equity securities of small cap companies located in the
U.S. The Portfolio may also invest up to 10% of its assets in equity securities
of companies of any market capitalization located in Canada.

Select Growth Portfolio's investment objective is capital appreciation. The
Portfolio tries to achieve its objective by investing primarily (under normal
circumstances, at least 65% of its total assets) in a diversified portfolio of
common stocks and other equity securities of very large cap companies that are
traded in the U.S securities markets that, at the time of purchase, have market
capitalizations of at least $10 billion and that the Portfolio's management
believes to have strong earnings growth potential. The Portfolio may also
purchase securities of mid and large cap U.S. companies (companies whose total
market capitalization is at least $1 billion and $5 billion, respectively) that
Portfolio management believes offer strong earnings growth potential. The
Portfolio seeks to purchase securities that are well diversified across economic
sectors. The Russell Top 200 Growth Index is the Fund's current benchmark. The
Portfolio will invest in equity securities that are traded in the U.S.
securities markets, including common stock, preferred stock, warrants and other
instruments.

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Each of the Portfolios are diversified, open-end, management investment
companies. Each Portfolio's investment objective is a fundamental policy and
cannot be changed without shareholder approval. The investment objectives and
policies of each Portfolio are described in more detail in Part A. There can be
no guarantee that a Portfolio's investment objective will be achieved.

For purposes of each Portfolio's investment policies, an issuer ordinarily
will be considered to be located in the country under the laws of which it is
organized or where the primary trading market of its securities is located. A
Portfolio, however, may consider a company to be located in a country, without
reference to its domicile or to the primary trading market of its securities,
when at least 50% of its non-current assets, capitalization, gross revenues or
profits in any one of the two most recent fiscal years represents (directly or
indirectly through subsidiaries) assets or activities located in such country. A
Portfolio also may consider closed-end investment companies to be located in the
country or countries in which they primarily make their portfolio investments.
The Select Growth Portfolio will only purchase securities that are traded on
registered exchanges or the over-the-counter market in the United States.

The Gold and Mining Portfolio attempts to achieve its investment policies
by seeking to identify securities of companies that, in management's opinion,
are undervalued relative to the value of the gold or other mining holdings of
such companies in light of current and anticipated economic or financial
conditions. The Portfolio considers a company to have substantial gold or other
mining assets when, in management's opinion, the company's holdings of the
assets are of such magnitude, when compared to capitalization, revenues or
operating profits of the company that changes in the economic value of the
assets will affect the market price of the equity securities of such company.
Generally a company has substantial gold or other mining assets when at least
50% of its non-current assets, capitalization, gross revenues or operating
profits of the company in the most recent or current fiscal year are involved in
or result from (directly or indirectly through subsidiaries) exploring, mining,
refining, processing, fabricating, dealing in or owning gold and other mining
assets. Examples of other mining assets include other precious metals (e.g.,
silver and platinum), non-ferrous metals (e.g., copper and nickel) and
industrial minerals (e.g., coal and iron ore). With the exception of gold
bullion, the Portfolio presently does not intend to invest directly in metals
and minerals assets or contracts related thereto.

ALL PORTFOLIOS

It is the policy of the International Portfolio, the Pan-European Growth
Portfolio, the U.S. Large Cap Portfolio and the Gold and Mining Portfolio
generally not to engage in trading for short-term gains. Due to its investment
strategy, the Select Growth Portfolio may engage in trading for short-term
gains. Mercury Asset Management International Ltd. ("Mercury International" or
the "Investment Adviser") and Mercury Asset Management US ("Mercury US" or the
"Investment Adviser") will effect portfolio transactions without regard to a
holding period if, in its judgment, such transactions are advisable in light of
a change in circumstances of a particular company or within a particular
industry or in general market, economic or financial conditions.

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The U.S. Government has from time to time in the past imposed restrictions
through taxation and otherwise, on non-U.S. investments by U.S. investors such
as the Portfolios. If such restrictions should be reinstated, it might become
necessary for a Portfolio to invest all or substantially all of its assets in
U.S. securities. In such event, a Portfolio would review its investment
objectives or fundamental policies to determine whether changes are appropriate.
Any changes in the investment objectives or fundamental policies set forth under
"Investment Restrictions" below would require the approval of the holders of a
majority of the Portfolio's outstanding voting securities.

A Portfolio's ability and decisions to purchase or sell portfolio
securities may be affected by laws or regulations relating to the convertibility
and repatriation of assets. Under present conditions, the Investment Adviser
does not believe that these considerations will have any significant effect on
its portfolio strategies, although there can be no assurance in this regard.

The Portfolios may invest in the securities of non-U.S. issuers in the form
of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"),
Global Depositary Receipts ("GDRs") or other securities convertible into
securities of non-U.S. issuers, with the execption of the Select Growth
Portfolio, which may invest up to 10% of its total assets in ADRS only. These
securities may not necessarily be denominated in the same currency as the
securities into which they may be converted. However, they would generally be
subject to the same risks as the securities into which they may be converted (as
more fully described in Part A and below). ADRs are receipts typically issued by
a U.S. bank or trust company that evidence ownership of underlying securities
issued by a non-U.S. corporation. EDRs are receipts issued in Europe that
evidence a similar ownership arrangement. GDRs are receipts issued throughout
the world that evidence a similar ownership arrangement. Generally, ADRs, in
registered form, are designed for use in the U.S. securities markets, and EDRs,
in bearer form, are designed for use in European securities markets. GDRs are
tradeable both in the United States and Europe and are designed for use
throughout the world. The Portfolios may invest in unsponsored ADRs, EDRs and
GDRs, with the exception of the Select Growth Portfolio, which may invest up to
10% of its total assets in unsponsored ADRs only. The issuers of unsponsored
ADRs, EDRs and GDRs are not obligated to disclose material information in the
United States, and therefore, there may be no correlation between such
information and the market value of such securities.

Each Portfolio's investment objectives and policies are described in
Part A. Certain types of securities in which a Portfolio may invest and certain
investment practices that the Portfolio may employ are discussed more fully
below.

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INTERNATIONAL PORTFOLIO, PAN-EUROPEAN GROWTH PORTFOLIO,
AND GOLD AND MINING PORTFOLIO

International Investing. International investments involve certain risks
not typically involved in domestic investments, including fluctuations in
foreign exchange rates, future political and economic developments, different
legal systems and the existence or possible imposition of exchange controls or
other U.S. or non-U.S. governmental laws or restrictions applicable to such
investments. Securities prices in different countries are subject to different
economic, financial and social factors. Because International Portfolio,
Pan-European Growth Portfolio and Gold and Mining Portfolio will invest in
securities denominated or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates may affect the value of securities in
the portfolio and the unrealized appreciation or depreciation of investments
insofar as U.S. investors are concerned. Foreign currency exchange rates are
determined by forces of supply and demand in the foreign exchange markets. These
forces are, in turn, affected by international balance of payments and other
economic and financial conditions, government intervention, speculation and
other factors. With respect to certain countries, there may be the possibility
of expropriation of assets, confiscatory taxation, high rates of inflation,
political or social instability or diplomatic developments that could affect
investments in those countries. In addition, certain non-U.S. investments may be
subject to non-U.S. withholding taxes. As a result, management of these
Portfolios may determine that, notwithstanding otherwise favorable investment
criteria, it may not be practicable or appropriate to invest in a particular
country.

For a number of years, certain European countries have been seeking
economic unification that would, among other things, reduce barriers between
countries, increase competition among companies, reduce government subsidies in
certain industries, and reduce or eliminate currency fluctuations among these
European countries. The Treaty on European Union (the "Maastricht Treaty") seeks
to set out a framework for the European Economic and Monetary Union ("EMU")
among the countries that comprise the European Union ("EU"). Among other things,
EMU establishes a single common European currency (the "euro") that was
introduced on January l, 1999 and is expected to replace the existing national
currencies of all EMU participants by July 1, 2002. Upon implementation of EMU,
certain securities issued in participating EU countries (beginning with
government and corporate bonds) were or are being redenominated in the euro, and
thereafter, will be listed, traded, and make dividend and other payments only in
euros.

No assurance can be given that EMU will continue to proceed as planned,
that the changes planned for the EU can be successfully implemented, or that
these changes will result in the economic and monetary unity and stability
intended. There is a possibility that EMU will not be completed, or will be
completed but then partially or completely unwound. Because any participating
country may opt out of EMU within the first three years, it is also possible
that a significant participant could choose to abandon EMU, which would diminish
its credibility and influence. Any of these occurrences could have adverse
effects on the markets of both participating and non-participating countries,
including sharp appreciation or depreciation of the participants' national
currencies and a significant increase in

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exchange rate volatility, a resurgence in economic protectionism, an
undermining of confidence in the European markets, an undermining of European
economic stability, the collapse or slowdown of the drive toward European
economic unity, and/or reversion of the attempts to lower government debt and
inflation rates that were introduced in anticipation of EMU. Also, withdrawal
from EMU by an initial participant could cause disruption of the financial
markets as securities that have been redenominated in euros are transferred
back into that country's national currency, particularly if the withdrawing
country is a major economic power. Such developments could have an adverse
impact on the Portfolios' investments in Europe generally or in specific
countries participating in EMU. Gains or losses resulting from the euro
conversion may be taxable to a Portfolio's interest holders under foreign or,
in certain limited circumstances, U.S. tax laws.

Many of the securities held by International Portfolio, Pan-European Growth
Portfolio and Gold and Mining Portfolio will not be registered in the U.S. with
the Securities and Exchange Commission nor will the issuers thereof be subject
to the Commission's reporting requirements. Accordingly, there may be less
publicly available information about a non-U.S. company than about a U.S.
company, and non-U.S. companies may not be subject to accounting, auditing and
financial reporting standards and requirements comparable to those to which U.S.
companies are subject.

Non-U.S. financial markets, while generally growing in trading volume,
typically have substantially less volume than U.S. markets, and securities of
many non-U.S. companies are less liquid and their prices more volatile than
securities of comparable domestic companies. The non-U.S. markets also have
different clearance and settlement procedures, and in certain markets there have
been times when settlements have been unable to keep pace with the volume of
securities transactions, making it difficult to conduct such transactions.
Further, satisfactory custodial services for investment securities may not be
available in some countries having smaller capital markets, which may result in
a Portfolio incurring additional costs and delays in transporting and custodying
such securities outside such countries. Delays in settlement could result in
temporary periods when assets of a Portfolio are uninvested and no return is
earned thereon and could cause a Portfolio to miss attractive investment
opportunities. Inability to dispose of a portfolio security due to settlement
problems either could result in losses to a Portfolio due to subsequent declines
in value of the portfolio security or, if the Portfolio has entered into a
contract to sell the security, could result in possible liability to the
purchaser. Brokerage commissions and other transaction costs of buying or
selling securities are generally higher in foreign countries than they are in
the United States.

In some countries there is less governmental supervision and regulation of
exchanges, brokers and issuers than there is in the United States. Some foreign
countries may have no laws or rules to protect investors the way that the U.S.
securities laws do. For example, some foreign countries may have no laws against
insider trading. Insider trading occurs when a person buys or sells a company's
securities based on non-public information about that company.

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A number of countries have authorized the formation of closed-end
investment companies to facilitate indirect foreign investment in their capital
markets. In accordance with the Investment Company Act of 1940, as amended (the
"Investment Company Act"), each Portfolio may invest up to 10% of its total
assets in securities of closed-end investment companies, not more than 5% of
which may be invested in any one such company. This restriction on investments
in securities of closed-end investment companies may limit opportunities for a
Portfolio to invest indirectly in certain smaller capital markets. Shares of
certain closed-end investment companies may at times be acquired only at market
prices representing premiums to their net asset values. If a Portfolio acquires
shares in closed-end investment companies, shareholders would bear both their
proportionate share of expenses in the Portfolio (including investment advisory
fees) and, indirectly, the expenses of such closed-end investment companies. A
Portfolio also may seek, at its own cost, to create its own investment entities
under the laws of certain countries.

In some countries, banks or other financial institutions may constitute a
substantial number of the leading companies or companies with the most
actively-traded securities. The Investment Company Act limits each Portfolio's
ability to invest in any equity security of an issuer that, in its most recent
fiscal year, derived more than 15% of its revenues from "securities related
activities" as defined by the rules thereunder. These provisions may restrict a
Portfolio's investments in certain foreign banks and other financial
institutions.

As described above, International Portfolio, Pan-European Growth Portfolio
and Gold and Mining Portfolio will invest in a diverse array of countries. The
securities and commodities markets of many countries have at times in the past
moved relatively independently of one another due to different economic,
financial, political and social factors. When such lack of correlation or
negative correlation in movements of these securities and commodities markets
occurs, it may reduce risk for a Portfolio's portfolio as a whole. This negative
correlation also may offset unrealized gains a Portfolio has derived from
movements in a particular market. To the extent the various markets move
independently, total portfolio volatility is reduced when the various markets
are combined into a single portfolio. Of course, movements in the various
securities and commodities markets may be offset by changes in foreign currency
exchange rates, where the different markets are denominated in different
currencies. Exchange rates frequently move independently of securities and
commodities markets in a particular country. As a result, gains in a particular
securities or commodities market may be affected by changes in exchange rates.

Investment in Emerging Markets. International Portfolio, Pan-European
Growth Portfolio and Gold and Mining Portfolio have the ability to invest in
the securities of issuers domiciled in various countries with emerging capital
markets. Specifically, a country with an emerging capital market is any country
that the World Bank, the International Finance Corporation, the United Nations
or its authorities has determined to have a low or middle income economy.
Countries with emerging markets can be found in regions such as Asia, Latin
America, Eastern Europe and Africa.

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Investments in the securities of issuers domiciled in countries with
emerging capital markets involve certain additional risks not involved in
investments in securities of issuers in more developed capital markets, such as
(i) low or non-existent trading volume, resulting in a lack of liquidity and
increased volatility in prices for such securities, as compared to securities of
comparable issuers in more developed capital markets, (ii) uncertain national
policies and social, political and economic instability, increasing the
potential for expropriation of assets, confiscatory taxation, high rates of
inflation or unfavorable diplomatic developments, (iii) possible fluctuations in
exchange rates, differing legal systems and the existence or possible imposition
of exchange controls, custodial restrictions or other non-U.S. or U.S.
governmental laws or restrictions applicable to such investments, (iv) national
policies that may limit a Portfolio's investment opportunities such as
restrictions on investment in issuers or industries deemed sensitive to national
interests, and (v) the lack or relatively early development of legal structures
governing private and foreign investments and private property. In addition to
withholding taxes on investment income, some countries with emerging markets may
impose differential capital gains taxes on foreign investors.

Such capital markets are emerging in a dynamic political and economic
environment brought about by events over recent years that have reshaped
political boundaries and traditional ideologies. In such a dynamic environment,
there can be no assurance that these capital markets will continue to present
viable investment opportunities for a Portfolio. In the past, governments of
such nations have expropriated substantial amounts of private property, and most
claims of the property owners have never been fully settled. There is no
assurance that such expropriations will not reoccur. In such an event, it is
possible that a Portfolio could lose the entire value of its investments in the
affected markets.

Also, there may be less publicly available information about issuers in
emerging markets than would be available about issuers in more developed capital
markets, and such issuers may not be subject to accounting, auditing and
financial reporting standards and requirements comparable to those to which U.S.
companies are subject. In certain countries with emerging capital markets,
reporting standards vary widely. As a result, traditional investment
measurements used in the U.S., such as price/earnings ratios, may not be
applicable. Emerging market securities may be substantially less liquid and more
volatile than those of mature markets, and companies may be held by a limited
number of persons. This may adversely affect the timing and pricing of a
Portfolio's acquisition or disposal of securities.

Practices in relation to settlement of securities transactions in emerging
markets involve higher risks than those in developed markets, in part because a
Portfolio will need to use brokers and counterparties that are less well
capitalized, and custody and registration of assets in some countries may be
unreliable.

In Russia, for example, registrars are not subject to effective government
supervision nor are they always independent from issuers. The possibility of
fraud, negligence, undue influence being exerted by the issuer or refusal to
recognize ownership exists, which along with other factors, could

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result in the registration being completely lost. Therefore, investors should
be aware that a Portfolio would absorb any loss resulting from these
registration problems and may have no successful claim for compensation. Some
of these concerns may also exist in other emerging capital markets.

U.S. LARGE CAP PORTFOLIO AND U.S. SMALL CAP GROWTH PORTFOLIO

The U.S. Large Cap Portfolio and the U.S. Small Cap Growth Portfolio
broadly define companies located in the U.S. or Canada. As a result, a
Portfolio's investments may include companies organized, traded or having
substantial operations outside the U.S. or Canada. This may expose a Portfolio
to risks associated with foreign investments, as described above.

Investing in Canada. While the U.S. Large Cap Portfolio will invest at
least 65% of its total assets in large cap companies located in the United
States and the U.S. Small Cap Growth Portfolio will invest at least 65% of its
total assets in small cap companies located in the United States, each may
invest up to 10% or less of its assets in Canada. Canadian securities are
sensitive to conditions within Canada, but also tend to follow the U.S. market.
The country's economy relies strongly on the production and processing of
natural resources and foreign trade. The Canadian government has attempted to
reduce restrictions against foreign investment, and its recent trade agreements
with the United States and Mexico are expected to increase trade; however, these
reforms could be reversed. Demand by many citizens in the Province of Quebec for
secession from Canada may significantly impact the Canadian economy.

144A Securities. The U.S. Large Cap Portfolio and the U.S. Small Cap Growth
Portfolio may purchase restricted securities that can be offered and sold to
"qualified institutional buyers" under Rule 144A under the Securities Act. The
Board of Trustees has determined to treat as liquid Rule 144A securities that
are either (i) freely tradable in their primary markets offshore or (ii)
non-investment grade debt securities which the Fund's management determines are
as liquid as publicly registered non-investment grade debt securities. The Board
of Trustees has adopted guidelines and delegated to the Portfolios' management
the daily function of determining and monitoring liquidity of restricted
securities. The Board of Trustees, however, will retain sufficient oversight and
be ultimately responsible for the determinations. Since it is not possible to
predict with assurance exactly how this market for restricted securities sold
and offered under Rule 144A will develop, the Board of Trustees will carefully
monitor investments in these securities. This investment practice could have the
effect of increasing the level of illiquidity in a Portfolio to the extent that
qualified institutional buyers become for a time uninterested in purchasing
these securities.

GOLD AND MINING PORTFOLIO

Investing in Gold and Other Mining Industries. The Gold and Mining
Portfolio invests principally in the equity securities of foreign and domestic
companies engaged in the exploration, mining, fabrication, processing or
marketing and distribution of gold. The Portfolio also invests in equity

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securities of foreign and domestic companies engaged in these activities with
respect to silver, platinum, diamonds or other precious and rare metals, base
metals and minerals. The Portfolio may also invest up to 10% of its assets
directly in gold bullion when the Portfolio believes it is undervalued relative
to the price of securities of gold mining companies. However, the Portfolio may
have internal guidelines that limit its investments in gold bullion to
considerably less than 10% of the Portfolio's assets. The industry risks
associated with an investment in the Portfolio include the sharp price
volatility of gold and other metals and of mining company shares. Investments
related to gold or other metals or minerals are considered speculative and are
affected by a host of worldwide economic, financial and political factors.
Prices of gold and other metals may fluctuate sharply over short periods due to
several factors: changes in inflation or expectations regarding inflation in
various countries; currency fluctuations; metal sales by governments, central
banks or international agencies; investment speculation; changes in industrial
and commercial demand; and government prohibitions or restrictions on the
private ownership of certain metals or minerals. Political and economic
conditions in gold-producing countries may also have a direct effect on the
mining and distribution of gold and, consequently, its price.

The Portfolio may invest, without limit, in securities of companies located
in countries with emerging capital markets including the Republic of South
Africa, the People's Republic of China, Russia, Indonesia, Uzbekistan, Peru,
Brazil, Mexico, Zimbabwe, Ghana, Mali, Tanzania, the Philippines and Papua New
Guinea. The Portfolio may also invest in securities of companies located in
countries with developed capital markets including the United States, Canada,
Japan, United Kingdom, Finland, France, Germany, Switzerland, Ireland,
Luxembourg, Spain and Australia.

Sales of gold by companies in Russia are largely unpredictable and often
relate to political and economic considerations rather than to market forces. In
South Africa, the activities of gold-mining companies are subject to policies
promulgated by the Ministry of Mines. The Reserve Bank of South Africa, as the
sole authorized agent for South African gold, influences the price and timing of
sales of South African gold. The South African government has also from time to
time imposed restrictions on the flow of international capital. Political and
social problems in South Africa may also pose certain risks. These include the
effect of social and political unrest on mining production and gold prices, as
well as the threat of nationalization or exploration by the government of South
Africa.

The Portfolio also invests to a lesser extent in other precious metal
shares, base metal shares and other mining related shares, and may also invest
directly in gold bullion. To the extent that the Portfolio invests in bullion,
it will be bought from and sold only to banks (both U.S. and non-U.S.), and
dealers who are members of or affiliated with members of a regulated U.S.
commodities exchange, in accordance with applicable investment laws. Gold
bullion will not be purchased in any form that is not readily marketable. Coins
will not be purchased for their numismatic value and will not be considered for
the Portfolio if they cannot be bought or sold in an active market. Any bullion
or coins purchased by the Portfolio will be delivered to and stored with a
qualified custodian bank in the U.S. Investors should be aware that bullion and
coins do not generally generate income, offering only the potential for capital
appreciation or depreciation, and may subject the Portfolio to higher custody
and transaction costs than

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those normally associated with the ownership of securities. However, in order
to generate return, the Portfolio may lend its gold bullion. The risks
associated with lending gold bullion are the same as lending securities as
described below in "Securities Lending."

Asset-Based Securities. The Gold and Mining Portfolio may invest in debt
securities, preferred stocks or convertible securities, the principal amount,
redemption terms or conversion terms of which are related to the market price of
gold bullion or some other natural resource asset. For the purposes of the
Portfolio's investment policies, these securities are referred to as
"asset-based securities." The Portfolio will only purchase asset-based
securities which are rated or are issued by issuers that have outstanding debt
obligations rated investment grade (that is, AAA, AA, A or BBB by Standard &
Poor's Ratings Services ("Standard & Poor's") or Aaa, Aa, A or Baa by Moody's
Investors Service, Inc. ("Moody's") or commercial paper rated A-1 by S&P or
Prime-1 by Moody's) or in unrated securities of issuers that the Investment
Adviser has determined to be of similar creditworthiness. Obligations ranked in
the fourth highest rating category, while considered "investment grade," may
have certain speculative characteristics and may be more likely to be downgraded
than securities rated in the three highest rating categories. If an asset-based
security is backed by a bank letter of credit or other similar facility, the
Investment Adviser may take such backing into consideration in determining the
creditworthiness of the issuer. While the market prices for an asset-based
security and the related gold bullion or other natural resource asset generally
are expected to move in the same direction, there may not be perfect correlation
in the two price movements. Asset-based securities may not be secured by a
security interest in or claim on the gold bullion or other underlying natural
resource assets.

The Portfolio will not acquire asset-based securities for which no
established secondary trading market exists if at the time of acquisition more
than 15% of its net assets are invested in securities that are not readily
marketable. The Portfolio may invest in asset-based securities, without limit,
when it has the option to put such securities to the issuer or a stand-by bank
or broker and receive the principal amount or redemption price thereof less
transaction costs on no more than seven days' notice or when the Portfolio has
the right to convert such securities into a readily marketable security in which
it could otherwise invest upon not less than seven days' notice.

The asset-based securities in which the Portfolio may invest may bear
interest or pay preferred dividends at below market (or even relatively nominal)
rates. The Portfolio's holdings of such securities therefore might not generate
appreciable current income, and the return from such securities primarily will
be from any profit on the sale, maturity or conversion thereof at a time when
the price of the related asset is higher than it was when the Portfolio
purchased such securities.

U.S. SMALL CAP GROWTH PORTFOLIO

Small Cap Companies. An investment in the U.S. Small Cap Growth Portfolio
involves greater risk than is customarily associated with funds that invest in
more established companies. The securities of smaller companies may be subject
to more abrupt or erratic market movements than

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larger, more established companies or the market average in general. These
companies may have limited product lines, markets or financial resources, or
they may be dependent on a limited management group. Because of these factors,
the Portfolio believes that its shares may be suitable for investment by
persons who can invest without concern for current income and who are in a
financial position to assume above-average investment risk in search of
above-average long-term reward. It is not intended as a complete investment
program but is designed for those long-term investors who are prepared to
experience above-average fluctuations in net asset value.

While the issuers in which the Portfolio will primarily invest may
offer greater opportunities for capital appreciation than large cap issuers,
investments in smaller companies may involve greater risks and thus may be
considered speculative. Portfolio management believes that properly selected
companies of this type have the potential to increase their earnings or market
valuation at a rate substantially in excess of the general growth of the
economy. Full development of these companies and trends frequently takes time
and, for this reason, the Portfolio should be considered as a long-term
investment and not as a vehicle for seeking short-term profits.

The securities in which the Portfolio invests may be traded only in
the over-the-counter market or on a regional securities exchange and may not be
traded every day or in the volume typical of trading on a national securities
exchange. As a result, the disposition by the Portfolio of portfolio securities
to meet redemptions or otherwise may require the Portfolio to sell these
securities at a discount from market prices or during periods when in
management's judgment such disposition is not desirable or to make many small
sales over a lengthy period of time.

While the process of selection and continuous supervision by Portfolio
management does not, of course, guarantee successful investment results, it
does provide access to an asset class not available to the average individual
due to the time and cost involved. Careful initial selection is particularly
important in this area as many new enterprises have promise but lack certain of
the fundamental factors necessary to prosper. Investing in small companies
requires specialized research and analysis. In addition, many investors cannot
invest sufficient assets in such companies to provide wide diversification.

Small companies are generally little known to most individual investors
although some may be dominant in their respective industries. Portfolio
management believes that relatively small companies will continue to have the
opportunity to develop into significant business enterprises. The Portfolio may
invest in securities of small issuers in the relatively early stages of business
development that have a new technology, a unique or proprietary product or
service, or a favorable market position. Such companies may not be counted upon
to develop into major industrial companies, but management believes that
eventual recognition of their special value characteristics by the investment
community can provide above-average long-term growth to the portfolio.

Equity securities of specific small cap issuers may present different
opportunities for long-term capital appreciation during varying portions of
economic or securities markets cycles, as well as during varying stages of
their business development. The market valuation of small cap issuers tends to

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fluctuate during economic or market cycles, presenting attractive investment
opportunities at various points during these cycles.

Smaller companies, due to the size and kinds of markets that they
serve, may be less susceptible than large companies to intervention from the
Federal government by means of price controls, regulations or litigation.

Initial Public Offering Risk. The volume of initial public offerings
and the levels at which the newly issued stocks trade in the secondary market
are affected by the performance of the stock market overall. If initial public
offerings are brought to the market, availability may be limited and the
Portfolio may not be able to buy any shares at the offering price, or if it is
able to buy shares, it may not be able to buy as many shares at the offering
price as it would like. In addition, the prices of securities involved in
initial public offerings are often subject to greater and more unpredictable
price changes than more established stocks.

SELECT GROWTH PORTFOLIO

Mid Cap Companies. The Select Growth Portfolio may invest in common
stocks and other equity securities of U.S. companies with medium market
capitalizations (i.e., between $1 billion and $5 billion) that Portfolio
management believes have strong earnings growth potential. Medium capitalization
companies may be more vulnerable to adverse business or economic events than
larger, more established companies. In particular, these mid-size companies may
have limited product lines, markets and financial resources, and may depend upon
a relatively small management group.

Foreign Security Risks. The Select Growth Portfolio may invest in
securities of foreign issuers with a strong U.S. trading presence, as well as
in sponsored and unsponsored ADRs. As a result, the Portfolio's investments may
include companies organized, traded or having substantial operations outside
the U.S. This may expose the Portfolio to risks associated with foreign
investments. Foreign investments involve certain risks not typically involved
in domestic investments, including fluctuations in foreign exchange rates,
future political and economic developments, different legal systems and the
existence or possible imposition of exchange controls or other U.S. or non-U.S.
governmental laws or restrictions applicable to such investments. Securities
prices in different countries are subject to different economic, financial
and social factors. Because the Portfolio may invest in companies that issue
securities denominated or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates may affect the value of securities
in the portfolio and the unrealized appreciation or depreciation of investments
insofar as U.S. investors are concerned. Foreign currency exchange rates are
determined by forces of supply and demand in the foreign exchange markets.
These forces are, in turn, affected by international balance of payments and
other economic and financial conditions, government intervention, speculation
and other factors. With respect to certain countries, there may be the
possibility of expropriation of assets, confiscatory taxation, high rates of
inflation, political or social instability or diplomatic developments that
could affect investment in those countries. In

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addition, certain investments may be subject to non-U.S. withholding taxes.
Although the Portfolio may invest in securities denominated in currencies other
than the U.S. dollar, it has no present intention to do so.

144A Securities. The Select Growth Portfolio may purchase restricted
securities that can be offered and sold to "qualified institutional buyers"
under Rule 144A under the Securities Act. The Board has determined to treat as
liquid Rule 144A securities that are either freely tradable in their primary
markets offshore or have been determined to be liquid in accordance with the
policies and procedures adopted by the Portfolios' Board. The Board has adopted
guidelines and delegated to the Investment Adviser the daily function of
determining and monitoring liquidity of restricted securities. The Board,
however, will retain sufficient oversight and be ultimately responsible for the
determinations. Since it is not possible to predict with assurance exactly how
this market for restricted securities sold and offered under Rule 144A will
continue to develop, the Board will carefully monitor the Portfolio's
investments in these securities. This investment practice could have the effect
of increasing the level of illiquidity in the Portfolio to the extent that
qualified institutional buyers become for a time uninterested in purchasing
these securities.

ALL PORTFOLIOS

Convertible Securities. Convertible securities entitle the holder to
receive interest payments paid on corporate debt securities or the dividend
preference on a preferred stock until such time as the convertible security
matures or is redeemed or until the holder elects to exercise the conversion
privilege.

The characteristics of convertible securities include the potential
for capital appreciation as the value of the underlying common stock increases,
the relatively high yield received from dividend or interest payments as
compared to common stock dividends and decreased risks of decline in value
relative to the underlying common stock due to their fixed-income nature. As a
result of the conversion feature, however, the interest rate or dividend
preference on a convertible security is generally less than would be the case
if the securities were issued in non-convertible form.

In analyzing convertible securities, the Investment Adviser will
consider both the yield on the convertible security relative to its credit
quality and the potential capital appreciation that is offered by the
underlying common stock, among other things.

Convertible securities are issued and traded in a number of securities
markets. Even in cases where a substantial portion of the convertible
securities held by a Portfolio are denominated in U.S. dollars, the underlying
equity securities may be quoted in the currency of the country where the issuer
is domiciled. With respect to convertible securities denominated in a currency
different from that of the underlying equity securities, the conversion price
may be based on a fixed exchange rate established at the time the security is
issued. As a result, fluctuations in the

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exchange rate between the currency in which the debt security is denominated
and the currency in which the share price is quoted will affect the value of
the convertible security.

Apart from currency considerations, the value of a convertible
security is influenced by both the yield of non-convertible securities of
comparable issuers and by the value of the underlying common stock. The value
of a convertible security viewed without regard to its conversion feature
(i.e., strictly on the basis of its yield) is sometimes referred to as its
"investment value." To the extent interest rates change, the investment value
of the convertible security typically will fluctuate. However, at the same
time, the value of the convertible security will be influenced by its
"conversion value," which is the market value of the underlying common stock
that would be obtained if the convertible security were converted. Conversion
value fluctuates directly with the price of the underlying common stock. If,
because of a low price of the common stock the conversion value is
substantially below the investment value of the convertible security, the price
of the convertible security is governed principally by its investment value

To the extent the conversion value of a convertible security increases
to a point that approximates or exceeds its investment value, the price of the
convertible security will be influenced principally by its conversion value. A
convertible security will sell at a premium over the conversion value to the
extent investors place value on the right to acquire the underlying common
stock while holding a fixed-income security. The yield and conversion premium
of convertible securities issued in Japan and the Euromarket are frequently
determined at levels that cause the conversion value to affect their market
value more than the securities' investment value.

Holders of convertible securities generally have a claim on the assets
of the issuer prior to the common stockholders but may be subordinated to other
debt securities of the same issuer. A convertible security may be subject to
redemption at the option of the issuer at a price established in the charter
provision, indenture or other governing instrument pursuant to which the
convertible security was issued. If a convertible security held by a Portfolio
is called for redemption, the Portfolio will be required to redeem the
security, convert it into the underlying common stock or sell it to a third
party. Certain convertible debt securities may provide a put option to the
holder which entitles the holder to cause the security to be redeemed by the
issuer at a premium over the stated principal amount of the debt security under
certain circumstances.

Although the Select Growth Portfolio may invest in convertible
securities, it has no present intention to do so.

Borrowing and Leverage. Each Portfolio may borrow from banks (as
defined in the Investment Company Act) in amounts up to 33 1/3% of its total
assets (including the amount borrowed) and may borrow up to an additional 5% of
its total assets for temporary purposes. A Portfolio may obtain such short-term
credit as may be necessary for the clearance of purchases and sales of
portfolio securities and may purchase securities on margin to the extent
permitted by applicable law, and may use

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borrowing to enable it to meet redemptions. In addition, the Select Growth
Portfolio will not purchase securities while its borrowings exceed 5% of its
assets.

The use of leverage by a Portfolio creates an opportunity for greater
total return, but, at the same time, creates special risks. For example,
leveraging may exaggerate changes in the net asset value of Portfolio interests
and in the yield on the Portfolio's portfolio. Although the principal of such
borrowings will be fixed, a Portfolio's assets may change in value during the
time the borrowings are outstanding. Borrowings will create interest expenses
for a Portfolio which can exceed the income from the assets purchased with the
borrowings. To the extent the income or capital appreciation derived from
securities purchased with borrowed funds exceeds the interest a Portfolio will
have to pay on the borrowings, the Portfolio's return will be greater than if
leverage had not been used. Conversely, if the income or capital appreciation
from the securities purchased with such borrowed funds is not sufficient to
cover the cost of borrowing, the return to the Portfolio will be less than if
leverage had not been used, and therefore the amount available for distribution
to shareholders as dividends and other distributions will be reduced. In the
latter case, the Investment Adviser in its best judgment nevertheless may
determine to maintain the Portfolio's leveraged position if it expects that the
benefits to the Portfolio's interestholders of maintaining the leveraged
position will outweigh the current reduced return. Although the Select Growth
Portfolio may use leverage for purposes other than for clearance of securities
transactions and to provide initial and variation margin payments in connection
with transactions involving futures contracts and options on futures, it has no
present intention to do so.

Certain types of borrowings by a Portfolio may result in the Portfolio
being subject to covenants in credit agreements relating to asset coverage,
portfolio composition requirements and other matters. It is not anticipated
that observance of such covenants would impede the Investment Adviser from
managing the Portfolio's portfolio in accordance with the Portfolio's
investment objectives and policies. However, a breach of any such covenants not
cured within the specified cure period may result in acceleration of
outstanding indebtedness and require the Portfolio to dispose of portfolio
investments at a time when it may be disadvantageous to do so.

A Portfolio at times may borrow from affiliates of the Investment
Adviser, provided that the terms of such borrowings are no less favorable than
those available from comparable sources of funds in the marketplace.

Debt Securities. Each Portfolio may hold convertible and
non-convertible debt securities, and preferred securities. The Portfolios have
established no rating criteria for the debt securities in which they may invest
and such securities may not be rated at all for creditworthiness. In purchasing
such securities, the Portfolio will rely on the Investment Adviser's judgment,
analysis and experience in evaluating the creditworthiness of an issuer of such
securities. The Investment Advisor will take into consideration, among other
things, the issuer's financial resources, its sensitivity to economic conditions
and trends, its operating history, the quality of the issuer's management and
regulatory matters.

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Junk Bonds. Junk bonds are debt securities that are rated below investment
grade by the major rating agencies or are unrated securities that
Portfolio management believes are of comparable quality. Although junk bonds
generally pay higher rates of interest than investment grade bonds, they are
high risk investments that may cause income and principal losses for a
Portfolio. The major risks in junk bond investments include the following:

Junk bonds may be issued by less creditworthy companies. These securities
are vulnerable to adverse changes in the issuer's industry and to general
economic conditions. Issuers of junk bonds may be unable to meet their interest
or principal payment obligations because of an economic downturn, specific
issuer developments or the unavailability of additional financing.

The issuers of junk bonds may have a larger amount of outstanding debt
relative to their assets than issuers of investment grade bonds. If the issuer
experiences financial stress, it may be unable to meet its debt obligations. The
issuer's ability to pay its debt obligations also may be lessened by specific
issuer developments, or the unavailability of additional financing.

Junk bonds are frequently ranked junior to claims by other creditors. If
the issuer cannot meet its obligations, the senior obligations are generally
paid off before the junior obligations.

Junk bonds frequently have redemption features that permit an issuer to
repurchase the security from a Portfolio before it matures. If an issuer
redeems the junk bonds, the Portfolio may have to invest the proceeds in bonds
with lower yields and may lose income.

Prices of junk bonds are subject to extreme price fluctuations. Negative
economic developments may have a greater impact on the prices of junk bonds than
on other higher rated fixed income securities.

Junk bonds may be less liquid than higher rated fixed income securities
even under normal economic conditions. There are fewer dealers in the junk bond
market, and there may be significant differences in the prices quoted for junk
bonds by the dealers. Because they are less liquid, judgment may play a greater
role in valuing certain of a Portfolio's portfolio securities than in case of
securities trading in a more liquid market.

A Portfolio may incur expenses to the extent necessary to seek recovery
upon default or to negotiate new terms with a defaulting issuer.

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Illiquid or Restricted Securities. Each Portfolio may invest up to 15%
of its net assets in securities that lack an established secondary trading
market or otherwise are considered illiquid. Liquidity of a security relates to
the ability to dispose easily of the security and the price to be obtained upon
disposition of the security, which may be less than would be obtained for a
comparable more liquid security. Illiquid securities may trade at a discount
from comparable, more liquid investments. Investment of a Portfolio's assets in
illiquid securities may restrict the ability of the Portfolio to dispose of its
investments in a timely fashion and for a fair price as well as its ability to
take advantage of market opportunities. The risks associated with illiquidity
will be particularly acute where a Portfolio's operations require cash, such as
when the Portfolio redeems shares or pays dividends, and could result in the
Portfolio borrowing to meet short-term cash requirements or incurring capital
losses on the sale of illiquid investments.

Each Portfolio may invest in securities that are not registered
("restricted securities") under the Securities Act of 1933, as amended (the
"Securities Act"). Restricted securities may be sold in private placement
transactions between the issuers and their purchasers and may be neither listed
on an exchange nor traded in other established markets. In many cases,
privately placed securities may not be freely transferable under the laws of
the applicable jurisdiction or due to contractual restrictions on resale. As a
result of the absence of a public trading market, privately placed securities
may be resold in privately negotiated transactions, the prices realized from
the sales, due to illiquidity, could be less than those originally paid by the
Portfolio or less than their fair market value. In addition, issuers whose
securities are not publicly traded may not be subject to the disclosure and
other investor protection requirements that may be applicable if their
securities were publicly traded. If any privately placed securities held by a
Portfolio are required to be registered under the securities laws of one or
more jurisdictions before being resold, the Portfolio may be required to bear
the expenses of registration. Certain of a Portfolio's investments in private
placements may consist of direct investments and may include investments in
smaller, less seasoned issuers, which may involve greater risks. These issuers
may have limited product lines, markets or financial resources, or they may be
dependent on a limited management group. In making investments in such
securities, a Portfolio may obtain access to material nonpublic information
which may restrict the Portfolio's ability to conduct portfolio transactions in
such securities.

Sovereign Debt. With the exception of the Select Growth Portfolio,
each Portfolio may invest more than 5% of its assets in debt obligations
("sovereign debt") issued or guaranteed by non-U.S. governments or their
agencies and instrumentalities ("governmental entities"). Investment in
sovereign debt may involve a high degree of risk. The governmental entity that
controls the repayment of sovereign debt may not be able or willing to repay
the principal and/or interest when due in accordance with the terms of such
debt. A governmental entity's willingness or ability to repay principal and
interest due in a timely manner may be affected by, among other factors, its
cash flow situation, the extent of its foreign reserves, the availability of
sufficient foreign exchange on the date a payment is due, the relative size of
the debt service burden to the economy as a whole, the governmental entity's
policy towards the International Monetary Fund and the political constraints to
which a governmental entity may be

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subject. Governmental entities may also be dependent on expected disbursements
from foreign governments, multilateral agencies and others abroad to reduce
principal and interest arrearages on their debt. The commitment on the part of
these governments, agencies and others to make such disbursements may be
conditioned on a governmental entity's implementation of economic reforms
and/or economic performance and the timely service of such debtor's
obligations. Failure to implement such reforms, achieve such levels of economic
performance or repay principal or interest when due may result in the
cancellation of such third parties' commitments to lend funds to the
governmental entity, which may further impair such debtor's ability or
willingness to timely service its debts. Consequently, governmental entities
may default on their sovereign debt.

Holders of sovereign debt, including a Portfolio, may be requested to
participate in the rescheduling of such debt and to extend further loans to
governmental entities. In the event of a default by the issuer, a Portfolio may
have few or no effective legal remedies for collecting on such debt.

Securities Lending. Each Portfolio may lend securities with a value
not exceeding 33 1/3% of its total assets to banks, brokers and other financial
institutions. In return, a Portfolio receives collateral in cash or securities
issued or guaranteed by the U.S. Government which will be maintained at all
times in an amount equal to at least 100% of the current market value of the
loaned securities. During the period of such a loan, a Portfolio typically
receives the income on both the loaned securities and the collateral and
thereby increases its yield. In certain circumstances, a Portfolio may receive
a flat fee for its loans. Such loans are terminable at any time and the
borrower, after notice, is required to return borrowed securities within five
business days. A Portfolio may pay reasonable finder's, administrative and
custodial fees in connection with its loans. In the event that the borrower
defaults on its obligation to return borrowed securities because of insolvency
or for any other reason, a Portfolio could experience delays and costs in
gaining access to the collateral and could suffer a loss to the extent the
value of the collateral falls below the market value of the borrowed
securities.

Repurchase Agreements. Each Portfolio may invest in securities
pursuant to repurchase agreements. Repurchase agreements may be entered into
only with a member bank of the Federal Reserve System or primary dealer in U.S.
Government securities or an affiliate thereof. Under such agreements, the bank
or primary dealer or an affiliate thereof agrees, upon entering into the
contract, to repurchase the security at a mutually agreed upon time and price,
thereby determining the yield during the term of the agreement. This insulates
the Portfolio from fluctuations in the market value of the underlying security
during such period, although, to the extent the repurchase agreement is not
denominated in U.S. dollars, a Portfolio's return may be affected by currency
fluctuations. A Portfolio may not invest more than 15% of its total assets in
repurchase agreements maturing in more than seven days (together with other
illiquid securities). Repurchase agreements may be construed to be
collateralized loans by the purchaser to the seller secured by the securities
transferred to the purchaser. A Portfolio will require the seller to provide
additional collateral if the market value of the securities falls below the
repurchase price at any time during the term of the repurchase agreement. In
the event of default by the seller under a repurchase agreement construed to be
a collateralized loan, the underlying

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securities are not owned by a Portfolio but only constitute collateral for the
seller's obligation to pay the repurchase price. Therefore, a Portfolio may
suffer time delays and incur costs or possible losses in connection with the
disposition of the collateral. In the event of a default under such a
repurchase agreement, instead of the contractual fixed rate of return, the rate
of return to a Portfolio shall be dependent upon intervening fluctuations of
the market value of such security and the accrued interest on the security. In
such event, the Portfolio would have rights against the seller for breach of
contract with respect to any losses arising from market fluctuations following
the failure of the seller to perform.

Warrants. Each Portfolio may invest in warrants, which are securities
permitting, but not obligating, the warrant holder to subscribe for other
securities. Buying a warrant does not make a Portfolio a shareholder of the
underlying stock. The warrant holder has no right to dividends or votes on the
underlying stock. A warrant does not carry any right to assets of the issuer,
and for this reason an investment in warrants may be more speculative than
other equity-based investments.

When-Issued Securities and Forward Commitments. Each Portfolio may
purchase or sell securities that they are entitled to receive on a when-issued
basis. Each Portfolio may also purchase or sell securities through a forward
commitment. These transactions involve the purchase or sale of securities by a
Portfolio at an established price with payment and delivery taking place in the
future. A Portfolio enters into these transactions to obtain what is considered
an advantageous price to the Portfolio at the time of entering into the
transaction. Each Portfolio has not established any limit on the percentage of
its assets that may be committed in connection with these transactions. When a
Portfolio is purchasing securities in these transactions, the Portfolio
segregates liquid securities in an amount equal to the amount of its purchase
commitments.

There can be no assurance that a security purchased on a when-issued
basis will be issued, or a security purchased or sold through a forward
commitment will be delivered. The value of securities in these transactions on
the delivery date may be more or less than a Portfolio's purchase price. The
Portfolio may bear the risk of a decline in the value of the security in these
transactions and may not benefit from an appreciation in the value of the
security during the commitment period.

Standby Commitment Agreements. With the exception of the Select Growth
Portfolio, each Portfolio may enter into standby commitment agreements. These
agreements commit a Portfolio, for a stated period of time, to purchase a
stated amount of securities which may be issued and sold to the Portfolio at
the option of the issuer. The price of the security is fixed at the time of the
commitment. At the time of entering into the agreement the Portfolio is paid a
commitment fee, regardless of whether or not the security is ultimately issued.
A Portfolio will enter into such agreements for the purpose of investing in the
security underlying the commitment at a price that is considered advantageous
to the Portfolio. A Portfolio will not enter into a standby commitment with a
remaining term in excess of 45 days and will limit its investment in such
commitments so that the aggregate purchase price of securities subject to such
commitments, together with the value of portfolio securities subject to legal
restrictions on resale that affect their marketability, will not exceed 15% of
its net assets taken at the time of the

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commitment. A Portfolio segregates liquid assets in an aggregate amount equal
to the purchase price of the securities underlying the commitment.

There can be no assurance that the securities subject to a standby
commitment will be issued, and the value of the security, if issued, on the
delivery date may be more or less than its purchase price. Since the issuance
of the security underlying the commitment is at the option of the issuer, a
Portfolio may bear the risk of a decline in the value of such security and may
not benefit from an appreciation in the value of the security during the
commitment period.

The purchase of a security subject to a standby commitment agreement
and the related commitment fee will be recorded on the date on which the
security can reasonably be expected to be issued, and the value of the security
thereafter will be reflected in the calculation of a Portfolio's net asset
value. The cost basis of the security will be adjusted by the amount of the
commitment fee. In the event the security is not issued, the commitment fee
will be recorded as income on the expiration date of the standby commitment.

Derivatives.

Each Portfolio may use instruments referred to as Derivatives.
Derivatives are financial instruments the value of which is derived from
another security, a commodity (such as gold or oil) or an index (a measure of
value or rates, such as the Standard & Poor's 500 Index or the prime lending
rate). Derivatives allow a Portfolio to increase or decrease the level of risk
to which the Portfolio is exposed more quickly and efficiently than
transactions in other types of instruments.

Hedging. Each Portfolio may use Derivatives for hedging purposes.
Hedging is a strategy in which a Derivative is used to offset the risk that
other Portfolio holdings may decrease in value. Losses on the other investment
may be substantially reduced by gains on a Derivative that reacts in an
opposite manner to market movements. While hedging can reduce losses, it can
also reduce or eliminate gains if the market moves in a different manner than
anticipated by a Portfolio or if the cost of the Derivative outweighs the
benefit of the hedge. Hedging also involves the risk that changes in the value
of the Derivative will not match those of the holdings being hedged as expected
by a Portfolio, in which case any losses on the holdings being hedged may not
be reduced.

Each Portfolio may use Derivative instruments and trading strategies
including the following:

Indexed and Inverse Securities. Each Portfolio may invest in
securities the potential return of which is based on an index. As an
illustration, a Portfolio may invest in a debt security that pays interest
based on the current value of an interest rate index, such as the prime rate. A
Portfolio may also invest in a debt security which returns principal at
maturity based on the level of a securities index or a basket of securities, or
based on the relative changes of two indices. In addition, a

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Portfolio may invest in securities the potential return of which is based
inversely on the change in an index (that is, a security the value of which
will move in the opposite direction of changes to an index). For example, a
Portfolio may invest in securities that pay a higher rate of interest when a
particular index decreases and pay a lower rate of interest (or do not fully
return principal) when the value of the index increases. If a Portfolio invests
in such securities, it may be subject to reduced or eliminated interest
payments or loss of principal in the event of an adverse movement in the
relevant index or indices. Indexed and inverse securities involve credit risk,
and certain indexed and inverse securities may involve currency risk, leverage
risk and liquidity risk. The Portfolios may invest in indexed and inverse
securities for hedging purposes only. When used for hedging purposes, indexed
and inverse securities involve correlation risk.

Options on Securities and Securities Indices

Purchasing Put Options. Each Portfolio may purchase put options on
securities held in its portfolio or on securities or interest rate indices
which are correlated with securities held in its portfolio. When a Portfolio
purchases a put option, in consideration for an up front payment (the "option
premium") the Portfolio acquires a right to sell to another party specified
securities owned by the Portfolio at a specified price (the "exercise price")
on or before a specified date (the "expiration date"), in the case of an option
on securities, or to receive from another party a payment based on the amount a
specified securities index declines below a specified level on or before the
expiration date, in the case of an option on a securities index. The purchase
of a put option limits a Portfolio's risk of loss in the event of a decline in
the market value of the portfolio holdings underlying the put option prior to
the option's expiration date. If the market value of the portfolio holdings
associated with the put option increases rather than decreases, however, the
Portfolio will lose the option premium and will consequently realize a lower
return on the portfolio holdings than would have been realized without the
purchase of the put. Purchasing a put option may involve correlation risk, and
may also involve liquidity and credit risk.

Purchasing Call Options. Each Portfolio may also purchase call options
on securities it intends to purchase or securities or interest rate indices,
which are correlated with the types of securities it intends to purchase. When
a Portfolio purchases a call option, in consideration for the option premium
the Portfolio acquires a right to purchase from another party specified
securities at the exercise price on or before the expiration date, in the case
of an option on securities, or to receive from another party a payment based on
the amount a specified securities index increases beyond a specified level on
or before the expiration date, in the case of an option on a securities index.
The purchase of a call option may protect a Portfolio from having to pay more
for a security as a consequence of increases in the market value for the
security during a period when the Portfolio is contemplating its purchase, in
the case of an option on a security, or attempting to identify specific
securities in which to invest in a market the Portfolio believes to be
attractive, in the case of an option on an index (an "anticipatory hedge"). In
the event a Portfolio determines not to purchase a security underlying a call
option, however, the Portfolio may lose the entire option premium. Purchasing a
call option involves correlation risk, and may also involve liquidity and
credit risk.

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Each Portfolio is also authorized to purchase put or call options in
connection with closing out put or call options it has previously sold.

Writing Call Options. Each Portfolio may write (i.e., sell) call
options on securities held in its portfolio or securities indices the
performance of which correlates with securities held in its portfolio. When a
Portfolio writes a call option, in return for an option premium, the Portfolio
gives another party the right to buy specified securities owned by the
Portfolio at the exercise price on or before the expiration date, in the case
of an option on securities, or agrees to pay to another party an amount based
on any gain in a specified securities index beyond a specified level on or
before the expiration date, in the case of an option on a securities index. In
the event the party to which a Portfolio has written an option fails to
exercise its rights under the option because the value of the underlying
securities is less than the exercise price, the Portfolio will partially offset
any decline in the value of the underlying securities through the receipt of
the option premium. By writing a call option, however, a Portfolio limits its
ability to sell the underlying securities, and gives up the opportunity to
profit from any increase in the value of the underlying securities beyond the
exercise price, while the option remains outstanding. Writing a call option may
involve correlation risk.

Writing Put Options. Each Portfolio may also write put options on
securities or securities indices. When a Portfolio writes a put option, in
return for an option premium the Portfolio gives another party the right to
sell to the Portfolio a specified security at the exercise price on or before
the expiration date, in the case of an option on a security, or agrees to pay
to another party an amount based on any decline in a specified securities index
below a specified level on or before the expiration date, in the case of an
option on a securities index. In the event the party to which a Portfolio has
written an option fails to exercise its rights under the option because the
value of the underlying securities is greater than the exercise price, the
Portfolio will profit by the amount of the option premium. By writing a put
option, however, the Portfolio will be obligated to purchase the underlying
security at a price that may be higher than the market value of the security at
the time of exercise as long as the put option is outstanding, in the case of
an option on a security, or make a cash payment reflecting any decline in the
index, in the case of an option on an index. Accordingly, when a Portfolio
writes a put option it is exposed to a risk of loss in the event the value of
the underlying securities falls below the exercise price, which loss
potentially may substantially exceed the amount of option premium received by
the Portfolio for writing the put option. A Portfolio will write a put option
on a security or a securities index only if the Portfolio would be willing to
purchase the security at the exercise price for investment purposes (in the
case of an option on a security) or is writing the put in connection with
trading strategies involving combinations of options -- for example, the sale
and purchase of options with identical expiration dates on the same security or
index but different exercise prices (a technique called a "spread"). Writing a
put option may involve substantial leverage risk.

A Portfolio is also authorized to sell put or call options in
connection with closing out call or put options it has previously purchased.

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Other than with respect to closing transactions, a Portfolio will
write only call or put options that are "covered." A call or put option will be
considered covered if a Portfolio has segregated assets with respect to such
option in the manner described in "Risk Factors in Derivatives" below. A call
option will also be considered covered if the Portfolio owns the securities it
would be required to deliver upon exercise of the option (or, in the case of an
option on a securities index, securities that substantially correlate with the
performance of such index) or owns a call option, warrant or convertible
instrument which is immediately exercisable for, or convertible into, such
security.

Types of Options. Each Portfolio may engage in transactions in options
on securities or securities indices on exchanges and in the over-the-counter
("OTC") markets. In general, exchange-traded options have standardized exercise
prices and expiration dates and require the parties to post margin against
their obligations, and the performance of the parties' obligations in
connection with such options is guaranteed by the exchange or a related
clearing corporation. OTC options have more flexible terms negotiated between
the buyer and the seller, but generally do not require the parties to post
margin and are subject to greater credit risk. OTC options also involve greater
liquidity risk. See "Additional Risk Factors of OTC Transactions; Limitations
on the Use of OTC Derivatives" below.

Futures

Each Portfolio may engage in transactions in futures and options
thereon. Futures are standardized, exchange-traded contracts which obligate a
purchaser to take delivery, and a seller to make delivery, of a specific amount
of an asset at a specified future date at a specified price. No price is paid
upon entering into a futures contract. Rather, upon purchasing or selling a
futures contract a Portfolio is required to deposit collateral ("margin") equal
to a percentage (generally less than 10%) of the contract value. Each day
thereafter until the futures position is closed, the Portfolio will pay
additional margin representing any loss experienced as a result of the futures
position the prior day or be entitled to a payment representing any profit
experienced as a result of the futures position the prior day. Futures involve
substantial leverage risk.

The sale of a futures contract limits a Portfolio's risk of loss
through a decline in the market value of portfolio holdings correlated with the
futures contract prior to the futures contract's expiration date. In the event
the market value of the portfolio holdings correlated with the futures contract
increases rather than decreases, however, a Portfolio will realize a loss on
the futures position and a lower return on the portfolio holdings than would
have been realized without the purchase of the futures contract.

The purchase of a futures contract may protect a Portfolio from having
to pay more for securities as a consequence of increases in the market value
for such securities during a period when the Portfolio was attempting to
identify specific securities in which to invest in a market the Portfolio
believes to be attractive. In the event that such securities decline in value
or the Portfolio

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<PAGE>

determines not to complete an anticipatory hedge transaction relating to a
futures contract, however, the Portfolio may realize a loss relating to the
futures position.

Each Portfolio will limit transactions in futures and options on
futures to financial futures contracts (i.e., contracts for which the
underlying asset is a currency or securities or interest rate index) purchased
or sold for hedging purposes (including anticipatory hedges). Each Portfolio
will further limit transactions in futures and options on futures to the extent
necessary to prevent that Portfolio from being deemed a "commodity pool" under
regulations of the Commodity Futures Trading Commission.

Swaps

Each Portfolio is authorized to enter into equity swap agreements,
which are OTC contracts in which one party agrees to make periodic payments
based on the change in market value of a specified equity security, basket of
equity securities or equity index in return for periodic payments based on a
fixed or variable interest rate or the change in market value of a different
equity security, basket of equity securities or equity index. Swap agreements
may be used to obtain exposure to an equity or market without owning or taking
physical custody of securities in circumstances in which direct investment is
restricted by local law or is otherwise impractical.

A Portfolio will enter into an equity swap transaction only if,
immediately following the time the Portfolio enters into the transaction, the
aggregate notional principal amount of equity swap transactions to which the
Portfolio is a party would not exceed 5% of the Portfolio's net assets.

Swap agreements entail the risk that a party will default on its
payment obligations to the Portfolio thereunder. A Portfolio will seek to lessen
the risk to some extent by entering into a transaction only if the counterparty
meets the current credit requirement for OTC option counterparties. Swap
agreements also bear the risk that a Portfolio will not be able to meet its
obligations to the counterparty. A Portfolio, however, will deposit in a
segregated account with its custodian, liquid securities or cash or cash
equivalents or other assets permitted to be so segregated by the Commission in
an amount equal to or greater than the market value of the liabilities under the
swap agreement or the amount it would cost the Portfolio initially to make an
equivalent direct investment, plus or minus any amount the Portfolio is
obligated to pay or is to receive under the swap agreement.

Foreign Exchange Transactions

Each Portfolio may engage in spot and forward foreign exchange
transactions and currency swaps, purchase and sell options on currencies and
purchase and sell currency futures and related options thereon (collectively,
"Currency Instruments") for purposes of hedging against the decline in the
value of currencies in which its portfolio holdings are denominated against the
U.S. dollar.

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Forward Foreign Exchange Transactions. Forward foreign exchange
transactions are OTC contracts to purchase or sell a specified amount of a
specified currency or multinational currency unit at a price and future date
set at the time of the contract. Spot foreign exchange transactions are similar
but require current, rather than future, settlement. A Portfolio will enter
into foreign exchange transactions only for purposes of hedging either a
specific transaction or a portfolio position. A Portfolio may enter into a
forward foreign exchange transaction for purposes of hedging a specific
transaction by, for example, purchasing a currency needed to settle a security
transaction at a future date or selling a currency in which the Portfolio has
received or anticipates receiving a dividend or distribution. A Portfolio may
enter into a foreign exchange transaction for purposes of hedging a portfolio
position by selling forward a currency in which a portfolio position of that
Portfolio is denominated or by purchasing a currency in which the Portfolio
anticipates acquiring a portfolio position in the near future. A Portfolio may
also hedge portfolio positions through currency swaps, which are transactions
in which one currency is simultaneously bought for a second currency on a spot
basis and sold for the second currency on a forward basis. Forward foreign
exchange transactions involve substantial currency risk, and also involve
credit and liquidity risk.

Currency Futures. Each Portfolio may also hedge against the decline in
the value of a currency against the U.S. dollar through use of currency futures
or options thereon. Currency futures are similar to forward foreign exchange
transactions except that futures are standardized, exchange-traded contracts.
See "Futures" above. Currency futures involve substantial currency risk, and
also involve leverage risk.

Currency Options. Each Portfolio may also hedge against the decline in
the value of a currency against the U.S. dollar through the use of currency
options. Currency options are similar to options on securities, but in
consideration for an option premium the writer of a currency option is obligated
to sell (in the case of a call option) or purchase (in the case of a put option)
a specified amount of a specified currency on or before the expiration date for
a specified amount of another currency. A Portfolio may engage in transactions
in options on currencies either on exchanges or OTC markets. See "Types of
Options" above and "Additional Risk Factors of OTC Transactions; Limitations on
the Use of OTC Derivatives" below. Currency options involve substantial currency
risk, and may also involve credit, leverage or liquidity risk.

Limitations on Currency Hedging. The Portfolios will not speculate in
Currency Instruments. Accordingly, a Portfolio will not hedge a currency in
excess of the aggregate market value of the securities which it owns (including
receivables for unsettled securities sales), or has committed to or anticipates
purchasing, which are denominated in such currency. A Portfolio may, however,
hedge a currency by entering into a transaction in a Currency Instrument
denominated in a currency other than the currency being hedged (a
"cross-hedge"). A Portfolio will only enter into a cross-hedge if the
Investment Adviser believes that (i) there is a demonstrable high correlation
between the currency in which the cross-hedge is denominated and the currency
being hedged, and (ii) executing a cross-hedge through the currency in which
the cross-hedge is denominated

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will be significantly more cost-effective or provide substantially greater
liquidity than executing a similar hedging transaction by means of the currency
being hedged.

Risk Factors in Hedging Foreign Currency. Hedging transactions
involving Currency Instruments involve substantial risks, including correlation
risk. While a Portfolio's use of Currency Instruments to effect hedging
strategies is intended to reduce the volatility of the net asset value of the
Portfolio's shares, the net asset value of the Portfolio's shares will
fluctuate. Moreover, although Currency Instruments will be used with the
intention of hedging against adverse currency movements, transactions in
Currency Instruments involve the risk that anticipated currency movements will
not be accurately predicted and that the Portfolio's hedging strategies will be
ineffective. To the extent that a Portfolio hedges against anticipated currency
movements which do not occur, the Portfolio may realize losses, and decrease
its total return, as the result of its hedging transactions. Furthermore, a
Portfolio will only engage in hedging activities from time to time and may not
be engaging in hedging activities when movements in currency exchange rates
occur.

It may not be possible for a Portfolio to hedge against currency
exchange rate movements, even if correctly anticipated, in the event that (i)
the currency exchange rate movement is so generally anticipated that the
Portfolio is not able to enter into a hedging transaction at an effective
price, or (ii) the currency exchange rate movement relates to a market with
respect to which Currency Instruments are not available and it is not possible
to engage in effective foreign currency hedging.

Risk Factors in Derivatives

Derivatives are volatile and involve significant risks, including:

- Credit risk -- the risk that the counterparty on a Derivative
transaction will be unable to honor its financial obligation
to a Portfolio.

- Currency risk -- the risk that changes in the exchange rate
between two currencies will adversely affect the value (in
U.S. dollar terms) of an investment.

- Leverage risk -- the risk associated with certain types of
investments or trading strategies (such as borrowing money to
increase the amount of investments) that relatively small
market movements may result in large changes in the value of
an investment. Certain investments or trading strategies that
involve leverage can result in losses that greatly exceed the
amount originally invested.

- Liquidity risk -- the risk that certain securities may be
difficult or impossible to sell at the time that the seller
would like or at the price that the seller believes the
security is currently worth.

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Use of Derivatives for hedging purposes involves correlation risk. If
the value of the Derivative moves more or less than the value of the hedged
instruments, a Portfolio will experience a gain or loss which will not be
completely offset by movements in the value of the hedged instruments.

Each Portfolio intends to enter into transactions involving Derivatives
only if there appears to be a liquid secondary market for such instruments or,
in the case of illiquid instruments traded in OTC transactions, such instruments
satisfy the criteria set forth below under "Additional Risk Factors of OTC
Transactions; Limitations on the Use of OTC Derivatives." However, there can be
no assurance that, at any specific time, either a liquid secondary market will
exist for a Derivative or a Portfolio will otherwise be able to sell such
instrument at an acceptable price. It may therefore not be possible to close a
position in a Derivative without incurring substantial losses, if at all.

Certain transactions in Derivatives (such as futures transactions or
sales of put options) involve substantial leverage risk and may expose a
Portfolio to potential losses, which exceed the amount originally invested by
the Portfolio. When a Portfolio engages in such a transaction, the Portfolio
will deposit in a segregated account at its custodian liquid securities with a
value at least equal to the Portfolio's exposure, on a marked-to-market basis,
to the transaction (as calculated pursuant to requirements of the Commission).
Such segregation will ensure that the Portfolio has assets available to satisfy
its obligations with respect to the transaction, but will not limit the
Portfolio's exposure to loss.

Additional Risk Factors of OTC Transactions; Limitations on the Use of OTC
Derivatives

Certain Derivatives traded in OTC markets, including indexed
securities, swaps and OTC options, involve substantial liquidity risk. The
absence of liquidity may make it difficult or impossible for a Portfolio to
sell such instruments promptly at an acceptable price. The absence of
liquidity may also make it more difficult for a Portfolio to ascertain a
market value for such instruments. A Portfolio will therefore acquire illiquid
OTC instruments (i) if the agreement pursuant to which the instrument is
purchased contains a formula price at which the instrument may be terminated or
sold, or (ii) for which the Investment Adviser anticipates the Portfolio can
receive on each business day at least two independent bids or offers, unless a
quotation from only one dealer is available, in which case that dealer's
quotation may be used.

Because Derivatives traded in OTC markets are not guaranteed by an
exchange or clearing corporation and generally do not require payment of
margin, to the extent that a Portfolio has unrealized gains in such instruments
or has deposited collateral with its counterparty, the Portfolio is at risk
that its counterparty will become bankrupt or otherwise fail to honor its
obligations. A Portfolio will attempt to minimize the risk that a counterparty,
will become bankrupt or otherwise fail to honor its obligations by engaging in
transactions in Derivatives traded in OTC markets only with financial
institutions which have substantial capital or which have provided the
Portfolio with a third-party guaranty or other credit enhancement.

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<PAGE>

Other Special Considerations. The International Portfolio, Pan-European
Portfolio, U.S. Large Cap Portfolio and U.S. Small Cap Growth Portfolio, may,
without limit, make short-term investments, purchase high quality bonds or buy
or sell derivatives to reduce exposure to equity securities when a Portfolio
believes it is advisable to do so (on a temporary defensive basis). The Select
Growth Portfolio may invest without limit in short-term obligations (such as
money market instruments, including U.S. Government securities, bank
obligations, high quality commercial paper and repurchase agreements involving
the foregoing securities), cash and shares of money market investment companies
when the Portfolio believes it is advisable to do so (during unusual economic or
market conditions, or for temporary defensive purposes).

If the Gold and Mining Portfolio anticipates significant adverse
changes in the price of gold, then the Portfolio's investments in stocks of
gold mining companies and gold bullion may be temporarily reduced to below 50%
of the Portfolio's total assets. In this case the Portfolio may make
substantial investments for temporary defensive purposes, in other mineral
mining companies (non-gold), and may hold substantial amounts of short-term
investments, such as money market securities and repurchase agreements.

Short-term investments and temporary defensive positions may limit the
potential for growth in the value of the interests of a Portfolio.

The U.S. Small Cap Growth Portfolio may also engage in short-term
trading of stocks purchased in initial public offerings. To the extent the U.S.
Small Cap Growth Portfolio does so, it may realize short-term gains.

INVESTMENT RESTRICTIONS

The Trust has adopted the following restrictions and policies relating
to the investment of each Portfolio's assets and each Portfolio's activities.
The fundamental restrictions set forth below may not be changed with respect to
a Portfolio without the approval of the holders of a majority of a Portfolio's
outstanding voting securities (which for this purpose and under the Investment
Company Act means the lesser of (i) 67% of the interests represented at a
meeting at which more than 50% of the outstanding interests are represented or
(ii) more than 50% of the outstanding interests). No Portfolio may:

1. Make any investment inconsistent with the Portfolio's classification
as a diversified company under the Investment Company Act.

2. Invest more than 25% of its assets, taken at market value, in the
securities of issuers in any particular industry (excluding the U.S. Government
and its agencies and instrumentalities), except that Gold and Mining Portfolio
will invest more than 25% of its assets in issuers principally engaged in the
mining and related manufacturing industries.

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<PAGE>

3. Make investments for the purpose of exercising control or management.
Investments by the Portfolio in wholly-owned investment entities created under
the laws of certain countries will not be deemed the making of investments for
the purpose of exercising control or management.

4. Purchase or sell real estate, except that, to the extent permitted by
applicable law, the Portfolio may invest in securities directly or indirectly
secured by real estate or interests therein or issued by companies that invest
in real estate or interests therein.

5. Make loans to other persons, except that the acquisition of bonds,
debentures or other corporate debt securities and investment in governmental
obligations, commercial paper, pass-through instruments, certificates of
deposit, bankers' acceptances, repurchase agreements or any similar instruments
shall not be deemed to be the making of a loan, and except further that the
Portfolio may lend its portfolio securities, provided that the lending of
portfolio securities may be made only in accordance with applicable law and the
guidelines set forth in the Portfolio's Registration Statement, as it may be
amended from time to time.

6. Issue senior securities to the extent such issuance would violate
applicable law.

7. Borrow money, except that (i) the Portfolio may borrow from banks (as
defined in the Investment Company Act) in amounts up to 33 1/3% of its total
assets (including the amount borrowed), (ii) the Portfolio may borrow up to an
additional 5% of its total assets for temporary purposes, (iii) the Portfolio
may obtain such short-term credit as may be necessary for the clearance of
purchases and sales of portfolio securities and (iv) the Portfolio may purchase
securities on margin to the extent permitted by applicable law. A Portfolio may
not pledge its assets other than to secure such borrowings or, to the extent
permitted by the Portfolio's investment policies as set forth in its
Registration Statement, as it may be amended from time to time, in connection
with hedging transactions, short sales, when-issued and forward commitment
transactions and similar investment strategies.

8. Underwrite securities of other issuers except insofar as a Portfolio
technically may be deemed an underwriter under the Securities Act of 1933, as
amended (the "Securities Act"), in selling portfolio securities.

9. Purchase or sell commodities or contracts on commodities, except to the
extent that a Portfolio may do so in accordance with applicable law and the
Portfolio's Registration Statement, as it may be amended from time to time, and
without registering as a commodity pool operator under the Commodity Exchange
Act.

In addition, the Trust has adopted non-fundamental restrictions that may
be changed with respect to a Portfolio by the Board of Trustees without
shareholder approval. Under the non-fundamental investment restrictions, no
Portfolio may:
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(a) Purchase securities of other investment companies, except to the extent
such purchases are permitted by applicable law. As a matter of policy, however,
a Portfolio will not purchase interests of any registered open-end investment
company or registered unit investment trust, in reliance on Section 12 (d) (1)
(F) or (G) (the "fund of funds" provisions) of the Investment Company Act, at
any time the Portfolio's interests are owned by another investment company that
is part of the same group of investment companies as the Portfolio.

(b) Make short sales of securities or maintain a short position, except to
the extent permitted by applicable law. The Portfolios currently do not intend
to engage in short sales, except short sales "against the box."

(c) Invest in securities that cannot be readily resold because of legal
or contractual restrictions or that cannot otherwise be marketed, redeemed or
put to the issuer or a third party, if at the time of acquisition more than 15%
of its net assets would be invested in such securities. This restriction shall
not apply to securities that mature within seven days or securities that the
Trustees of the Trust have otherwise determined to be liquid pursuant to
applicable law. Securities purchased in accordance with Rule 144A under the
Securities Act (which are restricted securities that can be resold to qualified
institutional buyers, but not to the general public) and determined to be
liquid by the Trustees are not subject to the limitations set forth in this
investment restriction.

In addition, the Select Growth Portfolio may not purchase additional
securities while its borrowings exceed 5% of its total assets.

If a percentage restriction on the investment or use of assets set forth
above is adhered to at the time a transaction is effected, later changes in
percentages resulting from changing values will not be considered a violation.

The staff of the Commission has taken the position that purchased
over-the-counter ("OTC") options and the assets used as cover for written OTC
options are illiquid securities. Therefore, the Trust has adopted an investment
policy pursuant to which no Portfolio will purchase or sell OTC options
(including OTC options on futures contracts) if, as a result of such
transaction, the sum of the market value of OTC options currently outstanding
that are held by the Portfolio, the market value of the underlying securities
covered by OTC call options currently outstanding that were sold by the
Portfolio and margin deposits on the Portfolio's existing OTC options on
futures contracts exceeds 15% of the net assets of the Portfolio taken at
market value, together with all other assets of the Portfolio that are illiquid
or are not otherwise readily marketable. However, if the OTC option is sold by
a Portfolio to a primary U.S. Government securities dealer recognized by the
Federal Reserve Bank of New York and if the Portfolio has the unconditional
contractual right to repurchase such OTC option from the dealer at a
predetermined price, then the Portfolio will treat as illiquid such amount of
the underlying securities as is equal to the repurchase price less the amount
by which the option is "in-the-money" (i.e., current market value of the
underlying securities minus the option's strike price). The repurchase price
with the

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primary dealers is typically a formula price that is generally based
on a multiple of the premium received for the option plus the amount by which
the option is "in-the-money." This policy as to OTC options is not a
fundamental policy of the Portfolios and may be amended by the Trustees without
the approval of the interestholders. However, the Trustees will not change or
modify this policy prior to the change or modification by the Commission staff
of its position.

Portfolio securities of the Portfolios generally may not be purchased
from, sold or loaned to the Investment Adviser or its affiliates or any of
their directors, general partners, officers or employees, acting as principal,
unless pursuant to a rule or exemptive order under the Investment Company Act.

Because of the affiliation of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch") with the Investment Adviser and Fund Asset
Management, L.P. ("FAM"), the Portfolios are prohibited from engaging in
certain transactions involving Merrill Lynch, the Investment Adviser, or any of
their affiliates, except for brokerage transactions permitted under the
Investment Company Act involving only usual and customary commissions or
transactions pursuant to an exemptive order under the Investment Company Act.
See "Portfolio Allocation and Other Practices" discussed at page 66. Rule
10f-3 under the Investment Company Act sets forth conditions under which a
Portfolio may purchase from an underwriting syndicate of which Merrill Lynch is
a member.

ITEM 13. MANAGEMENT OF THE REGISTRANT.

TRUSTEES AND OFFICERS.

The Trustees of the Trust consist of six individuals, four of whom are
not "interested persons" of the Trust as defined in the Investment Company Act.
The Trustees are responsible for the overall supervision of the operations of
the Trust and perform the various duties imposed on the trustees of investment
companies by the Investment Company Act. Information about the Trustees and
executive officers of the Trust, their ages and their principal occupations for
at least the last five years are set forth below. Unless otherwise noted, the
address of each executive officer and Trustee is P.O. Box 9011, Princeton, New
Jersey 08543-9011.

Jeffrey M. Peek (53)--Trustee and President(1)(2)--President of
Merrill Lynch Asset Management, L.P. ("MLAM") and FAM since 1997; President and
Director of Princeton Services, Inc. ("Princeton Services") since 1997;
Executive Vice President of Merrill Lynch & Co., Inc. ("ML & Co.") since 1997;
Co-Head of Merrill Lynch Investment Banking Division from March 1997 to
December 1997; Director of Merrill Lynch Global Securities Research and
Economics Division from 1995 to 1997; Head of Merrill Lynch Global Industries
Group from 1993 to 1995.

Terry K. Glenn (59)--Trustee and Executive Vice President(1)
(2)--Executive Vice President of MLAM and FAM since 1983; Executive Vice
President and Director of Princeton Services since

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1993; President of Princeton Funds Distributor, Inc. since 1986 and Director
thereof since 1991; President of Princeton Administrators, L.P. since 1988.

David O. Beim (60)--Trustee(2)--410 Uris Hall, Columbia University, New
York, New York 10027. Professor of Finance and Economics at the Columbia
University Graduate School of Business since 1991; Chairman of Outward Bound
USA since 1997; Chairman of Wave Hill, Inc. since 1980.

James T. Flynn (60)--Trustee(2)(3)--340 East 72nd Street, New York, New
York 10021. Chief Financial Officer of J.P. Morgan & Co. Inc. from 1990 to 1995
and an employee of J.P. Morgan in various capacities from 1967 to 1995.

W. Carl Kester (48)--Trustee(2)(3)--Harvard Business School, Morgan
Hall 393, Soldiers Field, Boston, Massachusetts 02163. Industrial Bank of Japan
Professor of Finance, Senior Associate Dean and Chairman of the MBA Program of
Harvard University Graduate School of Business Administration since 1999; James
R. Williston Professor of Business Administration of Harvard University
Graduate School of Business from 1997 to 1999; MBA Class of 1958 Professor of
Business Administration of Harvard University Graduate School of Business
Administration from 1981 to 1997; Independent Consultant since 1978.

Karen P. Robards (50)--Trustee(2)(3)--Robards & Company, 173 Riverside
Drive, New York, New York 10024. President of Robards & Company, a financial
advisory firm, for more than five years; Director of Enable Medical Corp. since
1996; Director of CineMuse Inc. since 1996; Director of the Cooke Center for
Learning and Development, a not-for-profit organization, since 1987.

Peter John Gibbs (42)--Senior Vice President(1)(2)--33 King William
Street, London, EC4R 9AS, England. Chairman and Chief Executive Officer of
Mercury International since 1998; Director of Mercury Asset Management Ltd.
since 1993; Director of Mercury Asset Management International Channel Islands
Ltd. since 1997.

Donald C. Burke (40)--Treasurer and Vice President(1)(2)--Senior Vice
President and Treasurer of MLAM and FAM since 1999; Senior Vice President and
Treasurer of Princeton Services since 1999; Vice President of Princeton Funds
Distributor, Inc. since 1999; First Vice President of MLAM and FAM from 1997 to
1999; Director of Taxation of MLAM since 1990; Vice President of MLAM and FAM
from 1990 to 1997.

Robert E. Putney, III (40)--Secretary(1)(2)--Director (Legal Advisory)
of MLAM and Princeton Administrators, L.P. since 1997; Vice President of MLAM
from 1994 to 1997; Vice President of Princeton Administrators, L.P. from 1996
to 1997; Attorney with MLAM from 1991 to 1994.

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--------------
(1) Interested person, as defined in the Investment Company Act, of the
Trust.

(2) Such Trustee or officer is a trustee, director or officer of other
investment companies for which the Investment Adviser, or the
Portfolios' sub-adviser, FAM, or their affiliates, acts as investment
adviser.

(3) Member of Mercury Asset Management Funds, Inc.'s and the Trust's Audit
and Nominating Committee, which is responsible for the selection of the
independent auditors and the selection and nomination of Directors and
Trustees not affiliated with the Investment Advisor or with an
affiliate of the Investment Adviser (each a "non-interested
Director/Trustee").

As of May 31, 2000, the officers and Trustees of the Trust as a group
(nine persons) owned an aggregate of less than 1% of the outstanding shares of
common stock of ML & Co. and owned an aggregate of less than 1% of the
outstanding shares of the Portfolios.

COMPENSATION OF DIRECTORS/TRUSTEES.

Mercury Asset Management Funds, Inc., (the "Corporation"), the
registered investment company whose series (the "Funds") invest all of their
assets in the corresponding Portfolios, and the Trust pay each Director/Trustee
not affiliated with the Investment Adviser or FAM or with an affiliate of the
Investment Adviser or FAM (each a "non-interested Director/Trustee"), for
service to each Portfolio, a fee of $3,000 per year plus $500 per in-person
meeting attended, together with such individual's actual out-of-pocket expenses
relating to attendance at meetings. The Corporation and the Trust also
compensate members of the Audit and Nominating Committee, which consists of all
of the non-interested Directors/Trustees, at the rate of $1,000 per year.

The following table sets forth the aggregate compensation the
Corporation and the Trust expect to pay to the non-affiliated
Directors/Trustees for their first full fiscal year and the aggregate
compensation paid by all investment companies advised by Mercury International,
FAM, or their affiliates ("Mercury and Affiliates-Advised Funds") to the
non-interested Directors/Trustees for the calendar year ended December 31,
1999.

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TOTAL
PENSION OR COMPENSATION
RETIREMENT FROM
BENEFITS FUND/PORTFOLIO
AGGREGATE ACCRUED AS AND MERCURY
COMPENSATION PART OF FUND/ AND AFFILIATES
NAME OF FROM FUNDS/ PORTFOLIO ADVISED
DIRECTOR/TRUSTEE PORTFOLIOS EXPENSES FUNDS(1)
---------------- ---------- -------- --------
David O. Beim........ $6,000 None $47,667
James T. Flynn....... $6,000 None $89,667
W. Carl Kester....... $6,000 None $89,667
Karen P. Robards..... $6,000 None $47,667

---------------

(1) In addition to the Corporation and the Trust, the Directors/Trustees
serve on other Mercury and Affiliates-Advised Funds as follows: Mr.
Beim (7 registered investment company consisting of 13 portfolios); Mr.
Flynn (9 registered investment companies consisting of 20 portfolios);
Mr. Kester (9 registered investment companies consisting of 20
portfolios); and Ms. Robards (7 registered investment company
consisting of 13 portfolios).

ITEM 14. CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES

Mercury International Fund ("International Fund") of the Corporation
controls International Portfolio. As of May 31, 2000, International Fund owns
100% of the currently outstanding interests of International Portfolio. As of
May 31, 2000, International Fund's holdings of International Portfolio represent
19.3% of the Trust as a whole.

Mercury Pan-European Growth Fund ("Pan-European Growth Fund") of the
Corporation controls Pan-European Growth Portfolio. As of May 31, 2000
Pan-European Growth Fund owns 100% of the currently outstanding interests of
Pan-European Growth Portfolio. As of May 31, 2000, Pan-European Growth Fund's
holdings of Pan-European Growth Portfolio represent 18.6% of the Trust as a
whole.

Mercury U.S. Large Cap Fund ("U.S. Large Cap Fund") of the Corporation
controls U.S. Large Cap Portfolio. As of May 31, 2000, U.S. Large Cap Fund owns
100% of the currently outstanding interests of U.S. Large Cap Portfolio. As of
May 31, 2000, U.S. Large Cap Fund's holdings of U.S. Large Cap Portfolio
represent 35.9% of the Trust as a whole.

Mercury Gold and Mining Fund ("Gold and Mining Fund") of the
Corporation controls Gold and Mining Portfolio. As of May 31, 2000, Gold and
Mining Fund owns 100% of the currently outstanding interests of Gold and Mining
Portfolio. As of May 31, 2000, Gold and Mining Fund's holdings of Gold and
Mining Portfolio represent .4% of the Trust as a whole.

Mercury U.S. Small Cap Growth Fund ("U.S. Small Cap Growth Fund") of
the Corporation controls U.S. Small Cap Growth Portfolio. As of May 31, 2000,
U.S. Small Cap Growth Fund owns 99.9% of the currently outstanding interests of
the Portfolio and FAM owns 100% of the currently outstanding interests in the
U.S. Small Cap Growth Fund. As of May 31, 2000, U.S. Small Cap

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Growth Fund's holdings of U.S. Small Cap Growth Portfolio represent less than
9.20% of the Trust as a whole.

As of June 16, 2000, (prior to the effective date of the
reorganization), Mercury Asset Management US, a division of Fund Asset
Management, L.P., controlled the Mercury Master Select Growth Portfolio through
its ownership of 100% of the currently outstanding interests of the Portfolio.

All holders of interests ("Holders") are entitled to vote in
proportion to the amount of their interest in a Portfolio or in the Trust, as
the case may be. There is no cumulative voting. Accordingly, the Holder or
Holders of more than 50% of the aggregate beneficial interests of the Trust
would be able to elect all the Trustees. With respect to the election of
Trustees and ratification of accountants the Holders of separate Portfolios
vote together; they generally vote separately by Portfolio on other matters.

ITEM 15. INVESTMENT ADVISORY AND OTHER SERVICES.

The Trust on behalf of each of the Pan-European Growth Portfolio,
International Portfolio, U.S. Large Cap Portfolio and Gold and Mining
Portfolio, has entered into investment advisory agreements with Mercury
International as Investment Adviser. The Trust, on behalf of the U.S. Small Cap
Growth Portfolio and the Select Growth Portfolio, has entered into investment
advisory agreements with Mercury US as Investment Adviser. (The investment
advisory agreements are referred to collectively as the "Advisory Agreements.")
As discussed in Part A, Mercury International, receives for its services as
Investment Adviser for International Portfolio, Pan-European Growth Portfolio,
and Gold and Mining Portfolio monthly compensation at the annual rate of 0.75%
of the average daily net assets of each Portfolio. The Investment Adviser
receives monthly compensation at the annual rate of 0.70% of the average daily
net assets of the Portfolio for its services to U.S. Small Cap Growth
Portfolio. With respect to U.S. Large Cap Portfolio and Select Growth
Portfolio, the Investment Adviser receives monthly compensation at the annual
rate of 0.50% of the average daily net assets of each Portfolio.

The table below sets forth information about the total investment
advisory fees paid by the Portfolios to the Investment Adviser.

Gold and
International Pan-European U.S. Large Cap Mining
Period Ending Portfolio Growth Portfolio Portfolio Portfolio
------------- --------- ---------------- --------- ---------
May 31, 1999* $1,312,369 $2,397,815 $1,343,092 $28,743

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----------
* Period is from commencement of operations (October 30, 1998 for
the International Portfolio and the Pan-European Growth Portfolio,
January 29, 1999 for the U.S. Large Cap Portfolio and February 26,
1999 for the Gold and Mining Portfolio).

The Advisory Agreements obligate the respective Investment Adviser to
provide investment advisory services and to pay, or cause an affiliate to pay,
for maintaining its staff and personnel and to provide office space, facilities
and necessary personnel for the Trust. Each Investment Adviser is also
obligated to pay, or cause an affiliate to pay, the fees of all Officers,
Trustees and Directors who are affiliated persons of the Investment Adviser or
any sub-adviser or of an affiliate of the Investment Adviser or any
sub-adviser. The Trust pays, or causes to be paid, all other expenses incurred
in the operation of the Portfolios and the Trust (except to the extent paid by
Mercury Funds Distributor, a division of Princeton Funds Distributors, Inc., as
Placement Agent), including, among other things, taxes, expenses for legal and
auditing services, costs of printing proxies, shareholder reports, copies of
the Registration Statement, charges of the Custodian, any Sub-custodian and
Transfer Agent, expenses of portfolio transactions, expenses of redemption of
shares, Commission fees, expenses of registering the shares under federal,
state or non-U.S. laws, fees and actual out-of-pocket expenses of Trustees who
are not affiliated persons of the respective Investment Adviser or any
sub-adviser, or of an affiliate of the Investment Adviser or of any
sub-adviser, accounting and pricing costs (including the daily calculation of
net asset value), insurance, interest, brokerage costs, litigation and other
extraordinary or non-recurring expenses, and other expenses properly payable by
the Trust or the Portfolios.

The Placement Agent will pay certain of the expenses of the Portfolios
incurred in connection with continuous offering of its interests. Accounting
services are provided to the Trust by the respective Investment Adviser or an
affiliate of the Investment Adviser, and the Trust reimburses the Investment
Adviser or an affiliate of the Investment Adviser for its costs in connection
with such services.

Securities held by the Portfolios, or other portfolios of the Trust,
may also be held by, or be appropriate investments for, other funds or
investment advisory clients for which each Investment Adviser or their
affiliates act as an adviser. Because of different objectives or other factors,
a particular security may be bought for one or more clients of an Investment
Adviser or an affiliate when one or more clients of the Investment Adviser or
an affiliate are selling the same security. If purchases or sales of securities
arise for consideration at or about the same time that would involve a
Portfolio or other clients or funds for which an Investment Adviser or an
affiliate acts as manager, transactions in such securities will be made,
insofar as feasible, for the respective funds and clients in a manner deemed
equitable to all. To the extent that transactions on behalf of more than one
client of an Investment Adviser or an affiliate during the same period may
increase the demand for securities being purchased or the supply of securities
being sold, there may be an adverse effect on price.

Mercury International is located at 33 King William Street, London
EC4R 9AS, England. Mercury International's intermediate parent company is
Mercury Asset Management Group Ltd., a

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London-based holding company of a group engaged in the provision of investment
management and advisory services globally. The ultimate parent of Mercury Asset
Management Group Ltd. is ML & Co., a financial services holding company. ML &
Co. is a controlling person of Mercury International as defined under the
Investment Company Act because of its power to exercise a controlling influence
over its management or policies.

Mercury US, a division of FAM, is located at 800 Scudders Mill Road,
Plainsboro, New Jersey 08536. FAM, an affiliate of Mercury International, is a
wholly owned subsidiary of ML & Co., a financial services holding company and
the parent of Merrill Lynch. ML & Co. and Princeton Services, Inc., the
partners of FAM, are "controlling persons" of FAM as defined under the
Investment Company Act because of their power to exercise a controlling
influence over its management or policies.

The Trust has entered into sub-advisory agreements (the "Sub-Advisory
Agreements") with FAM with respect to the Pan-European Growth Portfolio, the
International Portfolio, the U.S. Large Cap Portfolio and the Gold and Mining
Portfolio, pursuant to which FAM provides investment advisory services with
respect to all or a portion of each Portfolio's daily cash assets. The Trust
has agreed to use its reasonable best efforts to cause the Investment Adviser
to pay to FAM a fee in an amount to be determined from time to time by the
Investment Adviser and FAM but in no event in excess of the amount that the
Investment Adviser actually receives for providing services to the Trust
pursuant to the Advisory Agreement. Mercury US has entered into a sub-advisory
agreement (a "Sub-Advisory Agreement") with Mercury International with respect
to the U.S. Small Cap Growth Portfolio pursuant to which Mercury International
may provide assistance to Mercury US in managing the Portfolio, or may manage
all or a portion of the Portfolio to the extent not managed by Mercury US.
Mercury US will pay Mercury International a fee in an amount to be determined
from time to time by Mercury US and Mercury International, but in no event in
excess of the amount that Mercury US actually receives for providing services
to the Trust pursuant to the Advisory Agreement. Mercury US has entered into a
sub-advisory agreement (a "Sub-Advisory Agreement") with Turner Investment
Partners ("Turner Partners") with respect to the Select Growth Portfolio,
pursuant to which Turner Partners manages the Select Growth Portfolio. Mercury
US pays Turner Partners a fee based upon the average net assets of the Select
Growth Portfolio, but in no event in excess of the amount that Mercury US
actually receives for providing services to the Trust pursuant to its Advisory
Agreement. Turner Partners makes investment decisions for the Select Growth
Portfolio and continuously reviews, supervises and administers the Select
Growth Portfolio's investment programs. Turner Partners also ensures compliance
with the Select Growth Portfolio's investment policies and guidelines.

Turner Investment Partners, Inc. is located at 1235 Westlakes Drive,
Suite 350, Berwyn, PA 19312.

Duration and Termination. Unless earlier terminated as described
below, the Advisory Agreements and Sub-Advisory Agreements will each continue
in effect for two years from their effective dates. Thereafter, they will
continue in effect from year to year if approved annually (a) by the Board of
Trustees or by a majority of the outstanding shares of the respective Portfolio
and (b) by a majority of the Trustees who are not parties to such contract or
interested persons (as defined in the Investment Company Act) of any such
party. Such contracts are not assignable and may be terminated with respect

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to each Portfolio without penalty on 60 days' written notice at the option of
either party thereto or by the vote of the shareholders of the Portfolio.

CODE OF ETHICS.

The Board of Trustees of the Trust, the Board of Directors of the
Corporation, the Investment Advisers, and FAM have each adopted a Code of
Ethics under Rule 17j-1 of the Investment Company Act (together the "Codes").
The Codes significantly restrict the personal investing activities of all
employees of the Investment Advisers and FAM and, as described below, impose
additional, more onerous, restrictions on portfolio investment personnel. Among
other substantive restrictions, the Codes contain reporting and pre-clearance
requirements for employees of the Investment Advisers and FAM and provide for
trading "blackout periods" that prohibit trading by decision making access
persons (those who recommend or determine which securities transactions the
Trust undertakes) of the Trust within periods of trading by the Trust in the
same (or equivalent) security.

INDEPENDENT AUDITORS

Deloitte & Touche LLP, Princeton Forrestal Village, 116-300 Village
Boulevard, Princeton, New Jersey 08540, has been selected as the independent
auditors of the Trust. The independent auditors are responsible for auditing the
annual financial statements of the Trust.

LEGAL COUNSEL

Swidler Berlin Shereff Friedman, LLP, The Chrysler Building, 405
Lexington Avenue, New York 10174, is counsel for the Trust.

CUSTODIAN

Brown Brothers Harriman & Co., 40 Water Street, Boston, Massachusetts
02109, acts as the custodian of the Portfolios' assets. Under its contract with
the Trust, the Custodian is authorized to establish separate accounts in
foreign currencies and to cause foreign securities owned by the Portfolios to
be held in its offices outside the United States and with certain foreign banks
and securities depositors. The Custodian is responsible for safe guarding and
controlling the Portfolios' cash and securities, handling the receipt and
delivery of securities and collecting interest and dividends on the Portfolios'
investments.

ITEM 16. BROKERAGE ALLOCATION AND OTHER PRACTICES.

The respective Investment Adviser is responsible for making portfolio
decisions for each Portfolio, placing the Portfolio's brokerage business,
evaluating the reasonableness of brokerage commissions and negotiating the
amount of any commissions paid, subject to policies established by the

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Trust's Trustees and officers. The Trust has no obligation to deal with any
broker or group of brokers in the execution of transactions in portfolio
securities. Orders for transactions in portfolio securities are placed for the
Trust with a number of brokers and dealers, including affiliates of the
Investment Advisers. In placing orders, it is the policy of the Trust to obtain
the most favorable net results, taking into account various factors, including
price, commissions, if any, size of the transaction and difficulty of
execution. Where applicable, the Investment Advisers survey a number of brokers
and dealers in connection with proposed portfolio transactions and selects the
broker or dealer that offers the Trust the best price and execution or other
services that are of benefit to the Trust. Securities firms also may receive
brokerage commissions on transactions including covered call options written by
the Trust and the sale of underlying securities upon the exercise of such
options. In addition, consistent with the NASD Conduct Rules and policies
established by the Trustees, the Investment Advisers may consider sales of
shares of a corresponding series of the Corporation as a factor in the
selection of brokers or dealers to execute portfolio transactions for the
Trust.

Brokers who provide supplemental investment research to the Investment
Advisers may receive orders for transactions by the Trust. Such supplemental
research services ordinarily consist of assessments and analyses of the
business or prospects of a company, industry or economic sector. Information so
received will be in addition to and not in lieu of the services required to be
performed by each Investment Adviser under the respective Advisory Agreement.
If in the judgment of an Investment Adviser the Trust will be benefitted by
supplemental research services, the Investment Adviser is authorized to pay
brokerage commissions to a broker furnishing such services in excess of
commissions that another broker may have charged for effecting the same
transaction. The expenses of an Investment Adviser will not necessarily be
reduced as a result of the receipt of such supplemental information, and the
Investment Adviser may use such information in servicing its other accounts.

For the periods ended May 31, 1999, the following table shows the
amount of brokerage commissions paid by each Portfolio, the amount of brokerage
commissions paid by each Portfolio to Merrill Lynch, the percentage of each
Portfolio's brokerage commissions paid to Merrill Lynch, the percentage of each
Portfolio's aggregate dollar amount of transactions involving the payment of
commissions effected through Merrill Lynch and aggregate brokerage commissions
paid by each Portfolio:

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<TABLE>
<CAPTION>
Gold and
International Pan-European U.S. Large Mining
Period Ending May 31, 1999* Portfolio Growth Portfolio Cap Portfolio Portfolio
--------------------------- --------- ---------------- ------------- ---------
<S> <C> <C> <C> <C>
Aggregate brokerage commissions $1,214,551 $2,448,655 $542,919 $77,420
paid..................................

Aggregate brokerage commissions $426 $7,248 $0 $0
paid to Merrill Lynch.................

% of Portfolio's aggregate brokerage 0.04% 0.30% --% --%
commissions paid to Merrill Lynch.....

% of Portfolio's aggregate dollar 0.03% 0.44% --% --%
amount of transactions effected
through the broker....................

</TABLE>

----------
* Period is from commencement of operations. International Portfolio and
Pan-European Growth Portfolio commenced operations on October 30,
1998, U.S. Large Cap Portfolio commenced operations on January 29,
1999 and Gold and Mining Portfolio commenced operations on
February 26, 1999.

The Trust invests in certain securities traded in the over-the-counter
market and, where possible, deals directly with dealers who make a market in
the securities involved, except in those circumstances in which better prices
and execution are available elsewhere. Under the Investment Company Act,
persons affiliated with the Trust generally are prohibited from dealing with
the Trust as principal in purchase and sale of securities. Since transactions
in the over-the-counter market usually involve transactions with dealers acting
as principal for their own accounts, affiliated persons of the Trust, including
Merrill Lynch, will not serve as the Trust's dealer in such transactions.
However, affiliated persons of the Trust may serve as its broker in the
over-the-counter transactions conducted on an agency basis.

Pursuant to Section 11(a) of the Securities Exchange Act of 1934, as
amended, Merrill Lynch may execute transactions for the Trust on the floor of
any U.S. national securities exchange provided that prior authorization of such
transactions is obtained and Merrill Lynch furnishes a statement to the Trust
at least annually setting forth the compensation it has received in connection
with such transactions.

The Trustees of the Trust have considered the possibility of
recapturing for the benefit of the Trust brokerage commissions, dealer spreads
and other expenses of possible portfolio transactions, such as underwriting
commissions, by conducting such portfolio transactions through affiliated
entities, including Merrill Lynch. For example, brokerage commissions received
by Merrill Lynch could be offset against the management fee paid by the Trust
to the Investment Adviser. After considering all factors deemed relevant, the
Trustees made a determination not to seek such recapture. The Trustees will
reconsider this matter from time to time.

The portfolio turnover rate is calculated by dividing the lesser of a
Portfolio's annual sales or purchases of portfolio securities (exclusive of
purchases and sales of securities whose maturities at the time of acquisition
were one year or less) by the monthly average value of the securities in the
Portfolio

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during the year. With the exception of the Select Growth Portfolio, the
portfolio turnover rate for a Portfolio is generally anticipated to be under
200%. A high rate of portfolio turnover results in correspondingly higher
brokerage commission expenses and may also result in negative tax consequences
such as an increase in capital gains dividends or ordinary income dividends.

ITEM 17. CAPITAL STOCK AND OTHER SECURITIES.

Under the Declaration of Trust that establishes the Trust, a Delaware
business trust, the Trustees are authorized to issue beneficial interests in
each Portfolio of the Trust. Investors are entitled to participate, in
proportion to their investment, in distributions of taxable income, loss, gain
and deduction with respect to the Portfolio in which they have invested. Upon
liquidation or dissolution of a Portfolio, investors are entitled to share in
proportion to their investment in such Portfolio's net assets available for
distribution to its investors. Interests in a Portfolio have no preference,
preemptive, conversion or similar rights and are fully paid and nonassessable,
except as set forth below. Investments in a Portfolio generally may not be
transferred.

Each investor is entitled to a vote in proportion to the amount of its
interest in a Portfolio or in the Trust, as the case may be. Investors in the
Trust, or in any Portfolio, do not have cumulative voting rights, and investors
holding more than 50% of the aggregate beneficial interests in the Trust may
elect all of the Trustees of the Trust if they choose to do so and in such
event the other investors in the Trust would not be able to elect any Trustee.
The Trust is not required and has no current intention to hold annual meetings
of investors but the Trust will hold special meetings of investors when in the
judgment of the Trustees it is necessary or desirable to submit matters for an
investor vote.

A Portfolio shall be dissolved by unanimous consent of the Trustees by
written notice of dissolution to the Holders of the interests of the Portfolio.
The Trust shall be dissolved upon the dissolution of the last remaining
Portfolio.

The Declaration of Trust provides that obligations of the Trust and
the Portfolios are not binding upon the Trustees individually but only upon the
property of the Portfolios and that the Trustees will not be liable for any
action or failure to act (including without limitation, the failure to compel
in any way any former or acting Trustee to redress any breach of trust), but
nothing in the Declaration of Trust protects a Trustee against any liability to
which he would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office. The Declaration of Trust provides that the Trust may
maintain appropriate insurance (for example, fidelity bond and errors and
omissions insurance) for the protection of the Portfolios, their Holders,
Trustees, officers, employees and agents covering possible tort and other
liabilities.

The Trust currently consists of twenty-seven Portfolios. The Trust
reserves the right to create and issue interests in a number of additional
Portfolios. As indicated above, Holders of each Portfolio participate equally
in the earnings and assets of the particular Portfolio. Holders of each
Portfolio are

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<PAGE>

entitled to vote separately to approve advisory agreements or changes in
investment policy, but Holders of all Portfolios vote together in the election
or selection of Trustees and accountants for the Trust. Upon liquidation or
dissolution of a Portfolio, the Holders of such Portfolio are entitled to share
in proportion to their investment in the net assets of such Portfolio available
for distribution to Holders.

ITEM 18. PURCHASE, REDEMPTION AND PRICING OF SECURITIES.

Beneficial interests in the Trust are not offered to the public and
are issued solely in private placement transactions that do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act.
Investments in the Trust may be made only by a limited number of institutional
investors, including investment companies, common or commingled trust funds,
group trusts and certain other entities that are "accredited investors" within
the meaning of Regulation D under the 1933 Act. The number of Holders of any
Portfolio shall be limited to fewer than 100. This Registration Statement does
not constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.

The net asset value of the interests of each Portfolio is determined
once daily Monday through Friday after the close of business on the New York
Stock Exchange ("NYSE") on each day the NYSE is open for trading (a "Pricing
Day"). The close of business on the NYSE is generally 4:00 p.m., Eastern time.
Any assets or liabilities initially expressed in terms of non-U.S. dollar
currencies are translated into U.S. dollars at the prevailing market rates as
quoted by one or more banks or dealers on the day of valuation. The NYSE is not
open for trading on New Year's Day, Martin Luther King, Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day. The net asset value is computed by deducting the amount of
the Portfolio's total liabilities from the value of its total assets. Expenses,
including the advisory fees payable to the Investment Adviser, are accrued
daily.

Portfolio securities, including ADRs, EDRs, or GDRs, that are traded on
stock exchanges are valued at the last sale price (regular way) 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 for long positions, and at the last available ask price for short
positions. 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 Trustees as the primary market. Long positions in securities
traded in the OTC market are valued at the last available bid price in the OTC
market prior to the time of valuation. Portfolio securities that are traded
both in the OTC market and on a stock exchange are valued according to the
broadest and most representative market. Short positions in securities traded
on the OTC market are valued at the last available ask price in the OTC market
prior to the time of valuation. When the Portfolio writes an option, the amount
of the premium received is recorded on the books of the Portfolio as an asset
and an equivalent liability. The amount of the liability is subsequently valued
to reflect the current market value of the option written, based upon the last
sale price in the case of exchange-traded options or, in the case of options
traded in the OTC market, the last asked price.

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Options purchased by the Portfolio are valued at their last sale price in the
case of exchange-traded options or, in the case of options traded in the OTC
market, the last bid price. With respect to Gold and Mining Portfolio, gold
bullion will be valued at the last sale price on the Commodity Exchange, Inc.
Other investments, including financial futures contracts and related options,
are stated at market value. Securities and assets for which market quotations
are not readily available are valued at fair value as determined in good faith
by or under the direction of the Board of Trustees of the Trust. Such
valuations and procedures will be reviewed periodically by the Board of
Trustees.

Generally, trading in non-U.S. securities, as well as U.S. Government
securities and money market instruments, is substantially completed each day at
various times prior to the close of business on the NYSE. The values of such
securities used in computing the net asset value of the Portfolio's interests
are determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of business on the NYSE. Occasionally,
events affecting the values of such securities and such exchange rates may
occur between the times at which they are determined and the close of business
on the NYSE that will not be reflected in the computation of a Portfolio's net
asset value.

Each investor in the Trust may add to or reduce its investment in a
Portfolio on each Pricing Day. The value of each investor's interest in the
Portfolio will be determined after the close of business on the NYSE by
multiplying the net asset value of the Portfolio by the percentage, effective
for that day, that represents that investor's share of the aggregate interests
in the Portfolio. The close of business on the NYSE is generally 4:00 p.m.,
Eastern time. Any additions or withdrawals to be effected on that day will then
be effected. The investor's percentage of the aggregate beneficial interests in
the Portfolio will then be recomputed as the percentage equal to the fraction
(i) the numerator of which is the value of such investor's investment in the
Portfolio as of the time or determination on such day plus or minus, as the
case may be, the amount of any additions to or withdrawals from the investor's
investments in the Portfolio effected on such day, and (ii) the denominator of
which is the aggregate net asset value of the Portfolio as of such time on such
day plus or minus, as the case may be, the amount of the net additions to or
withdrawals from the aggregate investments in the Portfolio by all investors in
the Portfolio. The percentage so determined will then be applied to determine
the value of the investor's interest in the Portfolio after the close of
business of the NYSE on the next Pricing Day of the Portfolio. For further
information concerning the Portfolios' net asset value, and the valuation of
the Portfolios' assets, see Part A.

REDEMPTIONS.

An investor in the Trust may withdraw all or a portion of its
investment in any Portfolio on any Pricing Day at the net asset value next
determined after a withdrawal request in proper form is furnished by the
investor to the Portfolio. The proceeds of the withdrawal will be paid by the
Portfolio normally on the business day on which the withdrawal is effected, but
in any event within seven days. Investments in any Portfolio of the Trust may
not be transferred.

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ITEM 19. TAXATION OF THE TRUST

The Trust is organized as a Delaware business trust. Each Portfolio is
treated as a separate partnership under the Internal Revenue Code of 1986, as
amended (the "Code") and, thus, is not subject to income tax. Based upon the
status of each Portfolio as a partnership, each investor in a Portfolio will be
taxable on its share (as determined in accordance with the governing
instruments of such Portfolio) of such Portfolio's ordinary income and capital
gain in determining its income tax liability. The determination of such share
will be made in accordance with the Code and regulations promulgated
thereunder.

Although, as described above, the Portfolios will not be subject to
federal income tax, they will file appropriate income tax returns. Each
prospective Investor Fund which is a regulated investment company ("RIC") will
be required to agree, in its subscription agreement, that, for purposes of
determining its required distribution under Code Section 4982(a), it will
account for its share of items of income, gain, loss and deduction of a
Portfolio as they are taken into account by the Portfolio.

All of the Portfolios may invest in futures contracts or options.
Certain options, futures contracts and options on futures contracts are
"section 1256 contracts." Any gains or losses on section 1256 contracts are
generally considered 60% long-term and 40% short-term capital gains or losses
("60/40"). Also, section 1256 contracts held by a Portfolio at the end of each
taxable year are treated for federal income tax purposes as being sold on such
date for their fair market value. The resultant paper gains or losses are also
treated as 60/40 gains or losses. When the section 1256 contract is
subsequently disposed of, the actual gain or loss will be adjusted by the
amount of any preceding year-end gain or loss.

Foreign currency gains or losses on non-U.S. dollar denominated bonds
and other similar debt instruments and on any non-U.S. dollar denominated
futures contracts, options and forward contracts that are not section 1256
contracts generally will be treated as ordinary income or loss.

Certain hedging transactions undertaken by a Portfolio may result in
"straddles" for federal income tax purposes. The straddle rules may affect the
character of gains (or losses) realized by the Portfolios. In addition, losses
realized by the Portfolios on positions that are part of a straddle may be
deferred, rather than being taken into account in calculating taxable income
for the taxable year in which such losses are realized. Because only a few
regulations implementing the straddle rules have been promulgated, the tax
consequences of hedging transactions to the Portfolios are not entirely clear.
The Portfolios may make one or more of the elections available under the Code
which are applicable to straddles. If the Portfolios make any of the elections,
the amount, character and timing of the recognition of gains or losses from the
affected straddle positions will be determined under rules that vary according
to the elections made. The rules applicable under certain of the elections
operate to accelerate the recognition of gains or losses from the affected
straddle positions. Additionally, the conversion transaction or constructive
sale rules may apply to certain transactions (including straddles) to change
the

72
<PAGE>

character of capital gains to ordinary income or require the recognition of
income prior to the economic recognition of such income.

The Portfolios may be subject to a tax on dividend or interest income
received from securities of a non-U.S. issuer withheld by a foreign country at
the source. The United States has entered into tax treaties with many foreign
countries which entitle the Portfolios to a reduced rate of tax or exemption
from tax on such income. It is impossible to determine the effective rate of
foreign tax in advance since the amount of each Portfolio's assets to be
invested within various countries is not known.

The Portfolios may make investments that produce income that is not
matched by a corresponding cash receipt by the Portfolios, such as investments
in obligations having original issue discount or market discount (if a
Portfolio elects to accrue the market discount on a current basis with respect
to such instruments). Because such income may not be matched by a corresponding
cash receipt, the Portfolios may be required to borrow money or dispose of
other securities to be able to make distributions to investors.

Each Portfolio's taxable income will in most cases be determined on
the basis of reports made to such Portfolio by the issuers of the securities in
which such Portfolio invests. The tax treatment of certain securities in which
a Portfolio may invest is not free from doubt, and it is possible that an
Internal Revenue Service examination of the issuers of such securities or of
such Portfolio could result in adjustments to the income of the Portfolio.

Under the Trust, each Portfolio is to be managed in compliance with
the provisions of the Code applicable to RICs as though such requirements were
applied at the Portfolio level. Thus, consistent with its investment
objectives, each Portfolio will meet the income and diversification of assets
tests of the Code applicable to RICs. The Portfolios have received rulings from
the Internal Revenue Service that Holders of interests in the Portfolios that
are RICs will be treated as owners of their proportionate shares of the
Portfolios' assets and income for purposes of the Code's requirements
applicable thereto.

ITEM 20. UNDERWRITERS.

The exclusive placement agent for each Portfolio of the Trust is
Mercury Funds Distributor, a division of Princeton Funds Distributor, Inc.,
(the "Placement Agent"), an affiliate of the Investment Adviser and of Merrill
Lynch, with offices at 800 Scudders Mill Road, Plainsboro, New Jersey 08536.
The Placement Agent receives no compensation for serving in this capacity.
Investment companies, common and commingled trust funds and similar
organizations and entities may continuously invest in the Portfolios.

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ITEM 21. CALCULATION OF PERFORMANCE DATA.

Beneficial interests in the Trust are not offered to the public and
are issued solely in private placement transactions that do not involve any
"public offering" within the meaning of Section 4(2) of the 1933 Act.
Accordingly, the Trust will not advertise the Portfolios' performance. However,
certain of the Trust's Holders may from time to time advertise their
performance, which will be based upon the Trust's performance.

Total return figures are based on historical performance and are not
intended to indicate future performance. Average annual total return is
determined in accordance with a formula specified by the Securities and
Exchange Commission.

Average annual total return quotations for the specified periods are
computed by finding the average annual compounded rates of return (based on net
investment income and any realized and unrealized capital gains or losses on
portfolio investments over such periods) that would equate the initial amount
invested to the redeemable value of such investment at the end of each period.
Average annual total return is computed assuming all dividends and
distributions are reinvested and taking into account all applicable recurring
and nonrecurring expenses.

Annual, average annual and annualized total return and aggregate total
return performance data, both as a percentage and as a dollar amount, are based
on a hypothetical $1,000 investment and computed as described above, except
that as required by the periods of the quotations, actual annual, annualized or
aggregate data, rather than average annual data, may be quoted. Actual annual
or annualized total return data generally will be lower than average annual
total return data since the average rates of return reflect compounding of
return; aggregate total return data generally will be higher than average
annual total return data since the aggregate rates of return reflect
compounding over a longer period of time.

ITEM 22. FINANCIAL STATEMENTS

The International Portfolio, Pan-European Growth Portfolio, U.S. Large
Cap Portfolio and Gold and Mining Portfolio financial statements are
incorporated in this Part B by reference to their 1999 annual and November 1999
semi-annual reports to shareholders. In addition, the U.S. Small Cap Growth
Portfolio's financial statements are incorporated in this Part B by reference to
its November 1999 semi-annual report to shareholders. You may request copies of
the annual and semi-annual reports at no charge by calling 1-888-763-2260
between 8:00 a.m. and 8:00 p.m. on any business day. In addition, Parts A and B
of Amendment No. 5 to the Registrant's Registration Statement, dated March 3,
2000, which relate to the Mercury Master Global Balanced Portfolio, are
incorporated by reference into this Statement of Additional Information.

INDEPENDENT AUDITORS' REPORT

The Board of Trustees and Investor,
Mercury Master Select Growth Portfolio of
Mercury Asset Management Master Trust:

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<PAGE>

We have audited the accompanying statement of assets and liabilities of Mercury
Master Select Growth Portfolio of Mercury Asset Management Master Trust (the
"Trust") as of June 13, 2000. This financial statement is the responsibility of
the Trust's management. Our responsibility is to express an opinion on the
financial statement based on our audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, such financial statement presents fairly, in all material
respects, the financial position of the Mercury Master Select Growth Portfolio
of Mercury Asset Management Master Trust as of June 13, 2000 in accordance with
accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP

Deloitte & Touche LLP
Princeton, New Jersey
June 16, 2000

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<PAGE>

MERCURY MASTER SELECT GROWTH PORTFOLIO OF MERCURY ASSET
MANAGEMENT MASTER TRUST

STATEMENT OF ASSETS AND LIABILITIES

June 13, 2000

Mercury Master Select
Growth Portfolio
-----------------------
Assets:

Cash $ 100
Prepaid offering costs (Note 3) 14,000
-----------------------
Total Assets 14,100
=======================
Less liabilities and accrued expenses 14,000
-----------------------
Net Assets applicable to investors' interest
in the Portfolio. (Note 1) $ 100
=======================

---------------------------------
Notes to Financial Statement.

(1) Mercury Asset Management Master Trust (the "Trust") was organized as a
Delaware business trust on April 23, 1998. Mercury Master Select Growth
Portfolio (the "Portfolio") is a portfolio of the Trust. To date, the
Portfolio has not had any transactions other than those relating to
organizational matters and a $100 capital contribution to the Portfolio by
Mercury Asset Management US (the "Investment Adviser"), a division of Fund
Asset Management, L.P.

(2) The Trust on behalf of the Portfolio has entered into an investment
advisory agreement (the "Advisory Agreement") with the Investment Adviser.
(See "Investment Advisory and Other Services" in Part B of the
Registration Statement.) Certain officers and/or Trustees of the Trust are
officers and/or directors of the Investment Adviser.

(3) Prepaid offering costs consist of legal fees related to preparing the
registration statement, and will be amortized over a 12 month period
beginning with the commencement of operations of the Portfolio. The
Investment Adviser on behalf of the Portfolio will incur organization
costs, estimated at $6,500.

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APPENDIX A

RATINGS OF FIXED INCOME SECURITIES

DESCRIPTION OF MOODY'S INVESTORS SERVICES, INC.'S
CORPORATE DEBT RATINGS

Aaa Bonds that are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.

Aa Bonds that are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present that make the long-term risks appear somewhat larger than
in Aaa securities.

A Bonds that are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present that suggest a susceptibility to impairment sometime in the
future.

Baa Bonds that are rated Baa are considered as medium grade obligations; i.e.,
they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

Ba Bonds that are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate, and therefore not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.

B Bonds that are rated B generally lack characteristics of desirable
investments. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.

Caa Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.

A-1
<PAGE>

Ca Bonds that are rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.

C Bonds that are rated C are the lowest rated bonds, and issues so rated can
be regarded as having extremely poor prospects of ever attaining any real
investment standing.

Note: Moody's may apply numerical modifiers 1, 2 and 3 in each generic
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking, and the modifier
3 indicates that the issue ranks in the lower end of its generic category.

DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS

The term "commercial paper" as used by Moody's means promissory obligations
not having an original maturity in excess of nine months. Moody's makes no
representations as to whether such commercial paper is by any other definition
"commercial paper" or is exempt from registration under the Securities Act of
1933, as amended (the "Securities Act").

Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually promissory obligations not having an original maturity in
excess of nine months. Moody's makes no representation that such obligations
are exempt from registration under the Securities Act, nor does it represent
that any specific note is a valid obligation of a rated issuer or issued in
conformity with any applicable law. Moody's employs the following three
designations, all judged to be investment grade, to indicate the relative
repayment capacity of rated issuers:

Issuers rated Prime-1 (or related supporting institutions) have a superior
capacity for repayment of short-term promissory obligations. Prime-1 repayment
capacity will normally be evidenced by the following characteristics:

- Leading market positions in well-established industries

- High rates of return on funds employed

- Conservative capitalization structures with moderate reliance on debt
and ample asset protection

- Broad margins in earnings coverage of fixed financial charges and
higher internal cash generation

- Well established access to a range of financial markets and assured
sources of alternate liquidity

Issuers rated Prime-2 (or related supporting institutions) have a strong
capacity for repayment of short-term promissory obligations. This will normally
be evidenced by many of the characteristics cited

A-2
<PAGE>

above but to a lesser degree. Earnings trends and coverage ratios, while sound,
will be more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.

Issuers rated Prime-3 (or related supporting institutions) have an
acceptable capacity for repayment of short-term promissory obligations. The
effect of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
level of debt protection measurements and the requirement for relatively high
financial leverage. Adequate alternative liquidity is maintained.

Issuers rated Not Prime do not fall within any of the Prime rating
categories.

If an issuer represents to Moody's that its commercial paper obligations are
supported by the credit of another entity or entities, then the name or names
of such supporting entity or entities are listed within parentheses beneath the
name of the issuer, or there is a footnote referring the reader to another page
for the name or names of the supporting entity or entities. In assigning
ratings to such issuers, Moody's evaluates the financial strength of the
indicated affiliated corporations, commercial banks, insurance companies,
foreign governments or other entities, but only as one factor in the total
rating assessment. Moody's makes no representation and gives no opinion on the
legal validity or enforceability of any support arrangement. You are cautioned
to review with your counsel any questions regarding particular support
arrangements.

DESCRIPTION OF MOODY'S PREFERRED STOCK RATINGS

Because of the fundamental differences between preferred stocks and bonds, a
variation of the bond rating symbols is being used in the quality ranking of
preferred stocks. The symbols, presented below, are designed to avoid
comparison with bond quality in absolute terms. It should always be borne in
mind that preferred stocks occupy a junior position to bonds within a
particular capital structure and that these securities are rated within the
universe of preferred stocks.

Preferred stock rating symbols and their definitions are as follows:

aaa An issue that is rated "aaa" is considered to be a top-quality preferred
stock. This rating indicates good asset protection and the least risk of
dividend impairment within the universe of preferred stocks.

aa An issue that is rated "aa" is considered a high-grade preferred stock.
This rating indicates that there is reasonable assurance that earnings and
asset protection will remain relatively well maintained in the foreseeable
future.

A-3
<PAGE>

a An issue that is rated "a" is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the
"aaa" and "aa" classifications, earnings and asset protection are,
nevertheless, expected to be maintained at adequate levels.

baa An issue that is rated "baa" is considered to be medium grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.

ba An issue that is rated "ba" is considered to have speculative elements and
its future cannot be considered well assured. Earnings and asset
protection may be very moderate and not well safeguarded during adverse
periods. Uncertainty of position characterizes preferred stocks in this
class.

b An issue that is rated "b" generally lacks the characteristics of a
desirable investment. Assurance of dividend payments and maintenance of
other terms of the issue over any long period of time may be small.

caa An issue that is rated "caa" is likely to be in arrears on dividend
payments. This rating designation does not purport to indicate the future
status of payments.

ca An issue that is rated "ca" is speculative in a high degree and is likely
to be in arrears on dividends with little likelihood of eventual payment.

c This is the lowest rated class of preferred or preference stock. Issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.

Note: Moody's may apply numerical modifiers 1, 2 and 3 in each rating
classification from "aa" through "b" in its preferred stock rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.

DESCRIPTION OF STANDARD & POOR'S CORPORATE DEBT RATINGS

A Standard & Poor's corporate or municipal rating is a current assessment of
the creditworthiness of an obligor with respect to a specific obligation. This
assessment may take into consideration obligers such as guarantors, insurers or
lessees.

The debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.

A-4
<PAGE>

The ratings are based on current information furnished by the issuer or
obtained by Standard & Poor's from other sources it considers reliable. Standard
& Poor's does not perform an audit in connection with any rating and may, on
occasion, rely on unaudited financial information. The ratings may be changed,
suspended or withdrawn as a result of changes in, or unavailability of, such
information, or for other reasons.

The ratings are based, in varying degrees, on the following
considerations: (1) likelihood of default-capacity and willingness of the
obligor as to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation; (2) nature of and provisions of
the obligation; and (3) protection afforded by, and relative position of, the
obligation in the event of bankruptcy, reorganization or other arrangement
under the laws of bankruptcy and other laws affecting creditors' rights.

AAA Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the highest-rated issues only in small degree.

A Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher-rated
categories.

BBB Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal
for debt in this category than for debt in higher-rated categories.

Debt rated BB, B, CCC and C is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. BB indicates the least degree of speculation and C the highest
degree of speculation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large uncertainties or
major risk exposures to adverse conditions.

BB Debt rated BB has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions that could
lead to inadequate capacity to meet timely interest and principal payment.
The BB rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BBB- rating.

A-5
<PAGE>

B Debt rated B has a greater vulnerability to default but presently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest or repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB or BB-rating.

CCC Debt rated CCC has a current identifiable vulnerability to default, and is
dependent upon favorable business, financial and economic conditions to
meet timely payments of interest and repayments of principal. In the event
of adverse business, financial or economic conditions, it is not likely to
have the capacity to pay interest and repay principal. The CCC rating
category is also used for debt subordinated to senior debt that is
assigned an actual or implied B or B-rating.

CC The rating CC is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.

C The rating C is typically applied to debt subordinated to senior debt that
is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed but
debt service payments are continued.

CI The rating CI is reserved for income bonds on which no interest is being
paid.

D Debt rated D is in default. The D rating is assigned on the day an
interest or principal payment is missed. The D rating also will be used
upon the filing of a bankruptcy petition if debt service payments are
jeopardized.

PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
ratings categories.

PROVISIONAL RATINGS: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the debt being rated and indicates that payment of
debt service requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion of the project, makes no comment on the
likelihood or risk of default upon failure of such completion. The investor
should exercise judgment with respect to such likelihood and risk.

L The letter "L" indicates that the rating pertains to the principal amount
of those bonds to the extent that the underlying deposit collateral is
insured by the Federal Savings & Loan Insurance Corp. or the Federal
Deposit Insurance Corp. and interest is adequately collateralized

* Continuance of the rating is contingent upon Standard & Poor's receipt of
an executed copy of the escrow agreement or closing documentation
confirming investments and cash flows.

A-6
<PAGE>

NR Indicates that no rating has been requested, that there is insufficient
information on which to base a rating or that Standard & Poor's does not
rate a particular type of obligation as a matter of policy.

Debt obligations of issuers outside the United States and its territories
are rated on the same basis as domestic corporate and municipal issues. The
ratings measure the creditworthiness of the obligor but do not take into
account currency exchange and related uncertainties.

BOND INVESTMENT QUALITY STANDARDS: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated in the top
four categories ("AAA," "AA," "A," "BBB," commonly known as "investment grade"
ratings) are generally regarded as eligible for bank investment. In addition,
the laws of various states governing legal investments impose certain rating or
other standards for obligations eligible for investment by savings banks, trust
companies, insurance companies and fiduciaries generally.

DESCRIPTION OF STANDARD & POOR'S COMMERCIAL PAPER RATINGS

A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt having an original maturity of no more
than 365 days. Ratings are graded into four categories, ranging from "A" for
the highest quality obligations to "D" for the lowest. The four categories
are as follows:

A Issues assigned this highest rating are regarded as having the greatest
capacity for timely payment. Issues in this category are delineated with
the numbers 1, 2 and 3 to indicate the relative degree of safety.

A-1 This designation indicates that the degree of safety regarding timely
payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a plus (+)
sign designation.

A-2 Capacity for timely payment on issues with this designation is strong.
However, the relative degree of safety is not as high as for issues
designated "A-1."

A-3 Issues carrying this designation have a satisfactory capacity for timely
payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.

B Issues rated "B" are regarded as having only adequate capacity for timely
payment. However, such capacity may be damaged by changing conditions or
short-term adversities.

C This rating is assigned to short-term debt obligations with a doubtful
capacity for payment.

A-7
<PAGE>

D This rating indicates that the issue is either in default or is expected
to be in default upon maturity.

The commercial paper rating is not a recommendation to purchase or sell a
security. The ratings are based on current information furnished to Standard &
Poor's by the issuer or obtained from other sources it considers reliable. The
ratings may be changed, suspended, or withdrawn as a result of changes in or
unavailability of such information.

DESCRIPTION OF STANDARD & POOR'S PREFERRED STOCK RATINGS

A Standard & Poor's preferred stock rating is an assessment of the
capacity and willingness of an issuer to pay preferred stock dividends and any
applicable sinking fund obligations. A preferred stock rating differs from a
bond rating inasmuch as it is assigned to an equity issue, which issue is
intrinsically different from, and subordinated to, a debt issue. Therefore, to
reflect this difference, the preferred stock rating symbol will normally not be
higher than the bond rating symbol assigned to, or that would be assigned to,
the senior debt of the same issuer.

The preferred stock ratings are based on the following considerations:

I Likelihood of payment-capacity and willingness of the issuer to meet the
timely payment of preferred stock dividends and any applicable sinking
fund requirements in accordance with the terms of the obligation.

II. Nature of, and provisions of, the issue.

III. Relative position of the issue in the event of bankruptcy, reorganization,
or other arrangements affecting creditors' rights.

AAA This is the highest rating that may be assigned by Standard & Poor's
to a preferred stock issue and indicates an extremely strong capacity
to pay the preferred stock obligations.

AA A preferred stock issue rated "AA" also qualifies as a high-quality
fixed income security. The capacity to pay preferred stock
obligations is very strong, although not as overwhelming as for
issues rated "AAA."

A An issue rated "A" is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions.

BBB An issue rated "BBB" is regarded as backed by an adequate capacity to
pay the preferred stock obligations. Whereas it normally exhibits
adequate protection parameters, adverse economic

A-8
<PAGE>

conditions or changing circumstances are more likely to lead to a
weakened capacity to make payments for a preferred stock in this
category than for issues in the "A" category.

BB, Preferred stock rated "BB," "B," and "CCC" are regarded, on balance,
as

B, predominantly speculative with respect to the issuer's capacity to
pay

CCC preferred stock obligations. "BB" indicates the lowest degree of
speculation and "CCC" the highest degree of speculation. While such
issues will likely have some quality and protection characteristics,
these are outweighed by large uncertainties or major risk exposures
to adverse conditions.

CC The rating "CC" is reserved for a preferred stock issue in arrears on
dividends or sinking fund payments but that is currently paying.

C A preferred stock rated "C" is a non-paying issue.

D A preferred stock rated "D" is a non-paying issue in default on debt
instruments.

NR indicates that no rating has been requested, that there is insufficient
information on which to base a rating, or that S&P does not rate a particular
type of obligation as a matter of policy.

PLUS (+) or MINUS (-): To provide more detailed indications of preferred
stock quality, the ratings from "AA" to "CCC" may be modified by the addition
of a plus or minus sign to show relative standing within the major rating
categories.

The preferred stock ratings are not a recommendation to purchase or sell a
security, inasmuch as market price is not considered in arriving at the rating.
Preferred stock ratings are wholly unrelated to Standard & Poor's earnings and
dividend rankings for common stocks.

The ratings are based on current information furnished to Standard &
Poor's by the issuer, and obtained by Standard & Poor's from other sources it
considers reliable. The ratings may be changed, suspended, or withdrawn as a
result of changes in, or unavailability of, such information.

DESCRIPTION OF FITCH IBCA, INC.'S ("FITCH") INVESTMENT
GRADE BOND RATINGS

Fitch investment grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
represent Fitch's assessment of the issuer's ability to meet the obligations of
a specific debt issue or class of debt in a timely manner.

A-9
<PAGE>

any guarantor, as well as the economic and political environment that might
affect the issuer's future financial strength and credit quality.

Fitch ratings do not reflect any credit enhancement that may be provided
by insurance policies or financial guaranties unless otherwise indicated.

Bonds carrying the same rating are of similar but not necessarily
identical credit quality since the rating categories do not fully reflect small
differences in the degrees of credit risk.

Fitch ratings are not recommendations to buy, sell, or hold any security.
Ratings do not comment on the adequacy of market price, the suitability of any
security for a particular investor, or the tax-exempt nature or taxability of
payments made in respect of any security.

Fitch ratings are based on information obtained from issuers, other
obligers, underwriters, their experts, and other sources Fitch believes to be
reliable. Fitch does not audit or verify the truth or accuracy of such
information. Ratings may be changed, suspended, or withdrawn as a result of
changes in, or the unavailability of, information or for other reasons.

AAA Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable
events.

AA Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated "AAA." Because bonds rated in
the "AAA" and "AA" categories are not significantly vulnerable to
foreseeable future developments, short-term debt of these issuers is
generally rated "F-1+."

A Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.

BBB Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.

PLUS (+) OR MINUS (-): Plus and minus signs are used with a rating symbol
to indicate the relative position of a credit within the rating category. Plus
and minus signs, however, are not used in the "AAA" category.

A-10
<PAGE>

NR Indicates that Fitch does not rate the specific issue.

CONDITIONAL A conditional rating is premised on the successful completion of
a project or the occurrence of a specific event.

SUSPENDED A rating is suspended when Fitch deems the amount of information
available from the issuer to be inadequate for rating purposes.

WITHDRAWN A rating will be withdrawn when an issue matures or is called or
refinanced and, at Fitch's discretion, when an issuer fails to
furnish proper and timely information.

FITCHALERT Ratings are placed on FitchAlert to notify investors of an
occurrence that is likely to result in a rating change and the
likely direction of such change. These are designated as
"Positive" indicating a potential upgrade, "Negative," for
potential downgrade, or "Evolving," where ratings may be raised
or lowered. FitchAlert is relatively short-term, and should be
resolved within 12 months.

RATINGS OUTLOOK: An outlook is used to describe the most likely direction of any
rating change over the intermediate term. It is described as "Positive" or
"Negative." The absence of a designation indicates a stable outlook.

DESCRIPTION OF FITCH SPECULATIVE GRADE BOND RATINGS

Fitch speculative grade bond ratings provide a guide to investors in
determining the credit risk associated with a particular security. The ratings
("BB" to "C") represent Fitch's assessment of the likelihood of timely payment
of principal and interest in accordance with the terms of obligation for bond
issues not in default. For defaulted bonds, the rating ("DDD" to "D") is an
assessment of the ultimate recovery value through reorganization or
liquidation.

The rating takes into consideration special features of the issue, its
relationship to other obligations of the issuer, the current and prospective
financial condition and operating performance of the issuer and any guarantor,
as well as the economic and political environment that might affect the
issuer's future financial strength.

Bonds that have the same rating are of similar but not necessarily
identical credit quality since rating categories cannot fully reflect the
differences in degrees of credit risk.

BB Bonds are considered speculative. The obligor's ability to pay interest and
repay principal may be affected over time by adverse economic changes.
However, business and financial

A-11
<PAGE>

alternatives can be identified which could assist the obligor in
satisfying its debt service requirements.

B Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued
timely payment of principal and interest reflects the obligor's limited
margin of safety and the need for reasonable business and economic
activity throughout the life of the issue.

CCC Bonds have certain identifiable characteristics which, if not remedied,
may lead to default. The ability to meet obligations requires an
advantageous business and economic environment.

CC Bonds are minimally protected. Default in payment of interest and/or
principal seems probable over time.

C Bonds are in imminent default in payment of interest or principal.

DDD Bonds are in default on interest and/or principal payments. Such bonds

DD are extremely speculative and should be valued on the basis of their

D ultimate recovery value in liquidation or reorganization of the obligor.
"DDD" represents the highest potential for recovery on these bonds, and
"D" represents the lowest potential for recovery.

PLUS (+) OR MINUS (-): Plus and minus signs are used with a rating symbol to
indicate the relative position of a credit within the rating category. Plus and
minus signs, however, are not used in the "DDD," "DD," or "D" categories.

DESCRIPTION OF FITCH INVESTMENT GRADE SHORT-TERM RATINGS

Fitch's short-term ratings apply to debt obligations that are payable on
demand or have original maturities of generally up to three years, including
commercial paper, certificates of deposit, medium-term notes, and municipal and
investment notes.

The short-term rating places greater emphasis than a long-term rating on
the existence of liquidity necessary to meet the issuer's obligations in a
timely manner.

Fitch short-term ratings are as follows:

F-1+ Exceptionally Strong Credit Quality. Issues assigned this rating are
regarded as having the strongest degree of assurance for timely payment.

F-1 Very Strong Credit Quality. Issues assigned this rating reflect an
assurance of timely payment only slightly less in degree than issues rated
"F-1+."

A-12

<PAGE>

F-2 Good Credit Quality. Issues assigned this rating have a satisfactory
degree of assurance for timely payment, but the margin of safety is not as
great as for issues assigned "F-1+" and "F-1" ratings.

F-3 Fair Credit Quality. Issues assigned this rating have characteristics
suggesting that the degree of assurance for timely payment is adequate,
however, near-term adverse changes could cause these securities to be
rated below investment grade.

F-S Weak Credit Quality. Issues assigned this rating have characteristics
suggesting a minimal degree of assurance for timely payment and are
vulnerable to near-term adverse changes in financial and economic
conditions.

D Default. Issues assigned this rating are in actual or imminent payment
default. LOC. The symbol "LOC" indicates that the rating is based on a
letter of credit issued by a commercial bank.

A-13

<PAGE>

ALL PORTFOLIOS
PART C. OTHER INFORMATION

ITEM 23. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
-------
<S> <C>
1(a) -- Declaration of Trust of Registrant(1)
1(b) -- Amendment No. 1 to Declaration of Trust of Registrant(1)
1(c) -- Certificate of Trust(1)
1(d) -- Certificate of Amendment of Certificate of Trust(1)
1(e) -- Certificate of Amendment of Certificate of Trust(2)
1(f) -- Certificate of Amendment of Certificate of Trust(3)
1(g) -- Amendment No. 2 to Declaration of Trust of Registrant(4)
1(h) -- Amendment No. 3 to Declaration of Trust of Registrant(4)
1(i) -- Certificate of Amendment of Certificate of Trust(5)
1(j) -- Amendment No. 4 to Declaration of Trust of Registrant(5)
1(k) -- Amendment No. 5 to Declaration of Trust of Registrant
1(l) -- Certificate of Amendment of Certificate of Trust
2 -- Amended and Restated By-Laws of Registrant(1)
3 -- Instrument Defining Rights of Security Holders. Incorporated by reference to
Exhibits 1 and 2 above.
4(a) -- Investment Advisory Agreement between the Trust on behalf of Mercury Master
International Portfolio and Mercury Asset Management International Ltd.(1)
4(b) -- Investment Advisory Agreement between the Trust on behalf of Mercury Master
Pan-European Growth Portfolio and Mercury Asset Management International
Ltd.(1)
4(c) -- Sub-Advisory Agreement between the Trust on behalf of Mercury Master
International Portfolio and Fund Asset Management, L.P.(3)
4(d) -- Sub-Advisory Agreement between the Trust on behalf of Mercury Master
Pan-European Growth Portfolio and Fund Asset Management, L.P.(3)
4(e) -- Investment Advisory Agreement between the Trust on behalf of Mercury Master
U.S. Large Cap Portfolio and Mercury Asset Management International Ltd.(2)
4(f) -- Investment Advisory Agreement between the Trust on behalf of Mercury Master
Gold and Mining Portfolio and Mercury Asset Management International Ltd.(2)
4(g) -- Sub-Advisory Agreement between the Trust on behalf of Mercury Master U.S.
Large Cap Portfolio and Fund Asset Management, L.P.(3)
4(h) -- Sub-Advisory Agreement between the Trust on behalf of Mercury Master Gold
and Mining Portfolio and Fund Asset Management, L.P.(3)
4(i) -- Investment Advisory Agreement between the Trust on behalf of Mercury Master
Global Balanced Portfolio and Mercury Asset Management International Ltd.(3)
4(j) -- Sub-Advisory Agreement between the Trust on behalf of Mercury Master Global
Balanced Portfolio and Fund Asset Management L.P.(3)
</TABLE>

C-1

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
4(k) -- Investment Advisory Agreement between the Trust on behalf of Mercury Master
U.S. Small Cap Growth Portfolio and Mercury Asset Management US, a division
of Fund Asset Management, L.P.(5)
4(l) -- Sub-Advisory Agreement between Mercury Asset Management US, a division of
Fund Asset Management, L.P. and Mercury Asset Management International, Ltd.
(5)
4(m) -- Investment Advisory Agreement between the Trust on behalf of Mercury Master
Select Growth Portfolio and Mercury Asset Management US, a division of Fund
Asset Management, L.P.
4(n) -- Sub-Advisory Agreement between Mercury Asset Management US, a division of
Fund Asset Management, L.P. and Turner Investment Partners, Inc.
5 -- Not Applicable.
6 -- Not Applicable.
7 -- Custody Agreement between Registrant and Brown Brothers Harriman & Co.(1)
8(a) -- Placement Agent Agreement between Registrant and Mercury Funds Distributor,
a division of Princeton Funds Distributor, Inc.(1)
8(b) -- License Agreement relating to Use of Name among Mercury Asset Management
International Ltd., Mercury Asset Management Group Ltd. and Mercury Funds
Distributor, a division of Princeton Funds Distributor, Inc.(1)
8(c) -- License Agreement relating to Use of Name among Mercury Asset Management
International Ltd., Mercury Asset Management Group Ltd. and Registrant.(1)
8(d) -- Fee Agreement among Mercury Asset Management International Ltd., Fund Asset
Management, L.P. and the Trust on behalf of Mercury Master Pan-European
Growth Portfolio(4)
8(e) -- Fee Agreement among Mercury Asset Management International Ltd., Fund Asset
Management, L.P. and the Trust on behalf of Mercury Master International
Portfolio(4)
8(f) -- Fee Agreement among Mercury Asset Management International Ltd., Fund Asset
Management, L.P. and the Trust on behalf of Mercury Master U.S. Large Cap
Portfolio(4)
8(g) -- Fee Agreement among Mercury Asset Management International Ltd., Fund Asset
Management, L.P. and the Trust on behalf of Mercury Master Gold and Mining
Portfolio(4)
8(h) -- Fee Agreement among Mercury Asset Management International Ltd., Fund Asset
Management, L.P. and the Trust on behalf of Mercury Master Global Balanced
Portfolio(4)
8(i) -- Credit Agreement between the Registrant and a syndicate of banks(6)
8(j) -- Fee Waiver/Expense Reimbursement Agreement relating to Mercury Master Gold
and Mining Portfolio(7)
8(k) -- Fee Waiver/Expense Reimbursement Agreement relating to Mercury Master Select
Growth Portfolio
9 -- Not Applicable.
10 -- Consent of Deloitte & Touche LLP, independent auditors for the Registrant
11 -- Not Applicable.
</TABLE>

C-2

<PAGE>

<TABLE>
<CAPTION>
<S> <C>
12(a) -- Certificate of Mercury Asset Management Funds, Inc. with respect to Mercury
Master International Portfolio and Mercury Master Pan-European Growth
Portfolio(1)
12(b) -- Certificate of Mercury Asset Management Funds, Inc. and Mercury Funds
Distributor, a division of Princeton Funds Distributor, Inc. with respect to
Mercury Master U.S. Large Cap Portfolio and Mercury Master Gold and Mining
Portfolio(2)
12(c) -- Certificate of Mercury Asset Management Funds, Inc. and Mercury Funds
Distributor, a division of Princeton Funds Distributor, Inc. with respect to
Mercury Master Global Balanced Portfolio.(3)
12(d) -- Certificate of Mercury Asset Management Funds, Inc. and Mercury Funds
Distributor, a division of Princeton Funds Distributor, Inc. with respect to
Mercury Master U.S. Small Cap Growth Portfolio.(5)
12(e) -- Certificate of Mercury Asset Management US, a division of Fund Asset Management, L.P.
with respect to Mercury Master Select Growth Portfolio.
13 -- Not Applicable.
14 -- Not Applicable.
15 -- Not Applicable.
16(a) -- Form of Code of Ethics(8)
16(b) -- Code of Ethics for Turner Investment Partners, Inc.(9)
</TABLE>

-------------------

(1) Incorporated by reference to same numbered exhibits to Registrant's
initial Registration Statement on Form N-1A (File No. 811-09049).

(2) Incorporated by reference to identically numbered exhibit to
Amendment No. 1 to Registrant's Registration Statement on Form N-1A (File No.
811-09049).

(3) Incorporated by reference to identically numbered exhibit to
Amendment No. 2 to Registrant's Registration Statement on Form N-1A (File No.
811-09049).

(4) Incorporated by reference to identically numbered exhibit to
Amendment No. 3 to Registrant's Registration Statement on Form N-1A (File No.
811-09049).

(5) Incorporated by reference to identically numbered exhibit to
Amendment No. 4 to Registrant's Registration Statement on Form N-1A (File No.
811-09049).

(6) Incorporated by reference to Exhibit 8(b) to the Registration
Statement on Form N-1A of Master Premier Growth Trust (File No. 811-09733),
filed December 31, 1999.

(7) Incorporated by reference to Exhibit 8(e) to the Registration
Statement on Form N-1A of Mercury Gold and Mining Portfolio of Mercury Asset
Management Master Funds, Inc. (File Nos. 333-65955 and 811-08797).

C-3

<PAGE>

(8) Incorporated by reference to identically numbered exhibit to
Amendment No. 5 to Registrant's Registration Statement on Form N-1A (File No.
811-09049).

(9) Incorporated by reference to identically numbered exhibit to
Pre-Effective Amendment No. 1 to Registration Statement of Mercury Select
Growth Fund of Mercury Asset Management Funds, Inc. on Form N-1A
(File No. 333-32242).

ITEM 24. - PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE
TRUST.

Mercury International Fund ("International Fund") of Mercury Asset
Management Funds, Inc. (the "Corporation") controls Mercury Master International
Portfolio ("International Portfolio"). As of October 18, 1999, International
Fund owns 100% of the currently outstanding interests of International
Portfolio. As of October 18, 1999, International Fund's holdings of
International Portfolio represent 22.3% of the Trust as a whole.

Mercury Pan-European Growth Fund, Inc. ("Pan-European Growth Fund") of
the Corporation controls Mercury Master Pan-European Growth Portfolio ("Pan-
European Growth Portfolio"). As of October 18, 1999, Pan-European Growth Fund
owns 100% of the currently outstanding interests of Pan-European Growth
Portfolio. As of October 18, 1999, Pan-European Growth Fund's holdings of
Pan-European Growth Portfolio represent 27.3% of the Trust as a whole.

Mercury U.S. Large Cap Fund ("U.S. Large Cap Fund ") of the Corporation
controls Mercury Master U.S. Large Cap Portfolio ("U.S. Large Cap Portfolio").
As of October 18, 1999, U.S. Large Cap Fund owns 100% of the currently
outstanding interests of U.S. Large Cap Portfolio. As of October 18, 1999, U.S.
Large Cap Fund's holdings of U.S. Large Cap Portfolio represent 49.2% of the
Trust as a whole.

Mercury Gold and Mining Fund ("Gold and Mining Fund") of the
Corporation controls Mercury Master Gold and Mining Portfolio ("Gold and Mining
Portfolio"). As of October 18, 1999, Gold and Mining Fund owns 100% of the
currently outstanding interests of Gold and Mining Portfolio. As of October 18,
1999, Gold and Mining Fund's holdings of Gold and Mining Portfolio represent
1.2% of the Trust as a whole.

Mercury U.S. Small Cap Growth Fund ("U.S. Small Cap Growth Fund") of
the Corporation controls U.S. Small Cap Growth Portfolio. As of October 18,
1999, U.S. Small Cap Growth Fund owns 99.9% of the currently outstanding
interests of the Portfolio and FAM owns 100% of the currently outstanding
interests in the U.S. Small Cap Growth Fund. As of October 18, 1999, U.S. Small
Cap Growth Fund's holdings of U.S. Small Cap Growth Portfolio represents less
than .1% of the Trust as a whole.

As of June 16, 2000, the Select Growth Portfolio does not control any
person.

The Investment Adviser to the International Fund, Pan-European Growth
Fund, U.S. Large Cap Fund and Gold and Mining Fund was incorporated under the
laws of England and Wales. Mercury Asset Management Funds, Inc. was incorporated
under the laws of the State of Maryland. FAM was organized as a Delaware limited
partnership.

C-4

<PAGE>

ITEM 25. -- INDEMNIFICATION.

As permitted by Section 17(h) and (i) of the Investment Company Act of
1940, as amended (the "1940 Act"), and pursuant to Sections 8.2, 8.3 and 8.4, of
Article VIII of the Registrant's Declaration of Trust (Exhibit 1 to this
Registrant Statement), Trustees, officers, employees and agents of the Trust
will be indemnified to the maximum extent permitted by Delaware law and the 1940
Act.

Article VIII, Section 8.2 provides, inter alia, that no Trustee,
officer, employee or agent of the Registrant shall be liable to the Registrant,
its holders, or to any other Trustee, officer, employee or agent thereof for any
action or failure to act (including, without limitation, the failure to compel
in any way any former or acting Trustee to redress any breach of trust) except
for his own bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties.

Article VIII, Section 8.3 of the Registrant's Declaration of Trust
provides:

Section 8.3. Indemnification. The Trust shall indemnify each of its
Trustees, officers, employees and agents (including persons who serve at its
request as directors, officers or trustees of another organization in which it
has any interest, as a shareholder, creditor or otherwise) against all
liabilities and expenses (including amounts paid in satisfaction of judgments,
in compromise, as fines and penalties, and as counsel fees) reasonably incurred
by him in connection with the defense or disposition of any action, suit or
other proceeding, whether civil or criminal, in which he may be involved or with
which he may be threatened, while in office or thereafter, by reason of his
being or having been such a Trustee, officer, employee or agent, except with
respect to any matter as to which he shall have been adjudicated to have acted
in bad faith, willful misfeasance, gross negligence or reckless disregard of his
duties, such liabilities and expenses being liabilities belonging to the Series
out of which such claim for indemnification arises; provided, however, that as
to any matter disposed of by a compromise payment by such Person, pursuant to a
consent decree or otherwise, no indemnification either for said payment or for
any other expenses shall be provided unless there has been a determination that
such Person did not engage in willful misfeasance, bad faith, gross negligence
or reckless disregard of the duties involved in the conduct of his office by the
court or other body approving the settlement or other disposition or, in the
absence of a judicial determination, by a reasonable determination, based upon a
review of readily available facts (as opposed to a full trial-type inquiry),
that he did not engage in such conduct, which determination shall be made by a
majority of a quorum of Trustees who are neither Interested Persons of the Trust
(within the meaning of the 1940 Act) nor parties to the action, suit or
proceeding, or by written opinion from independent legal counsel approved by the
Trustees. The rights accruing to any Person under these provisions shall not
exclude any other right to which he may be lawfully entitled; provided that no
Person may satisfy any right of indemnity or reimbursement granted herein or to
which he may be otherwise entitled except out of the Trust Property. The
Trustees may make advance payments in connection with indemnification under this
Section 8.3; provided that any advance payment of expenses by the Trust to any
Trustee, officer, employee or agent shall be made only upon the undertaking by
such Trustee, officer, employee or agent to repay the advance unless it is
ultimately determined that he

C-5

<PAGE>

is entitled to indemnification as above provided, and only if one of the
following conditions is met:

(a) the Trustee, officer, employee or agent to be
indemnified provides a security for his undertaking;
or

(b) the Trust shall be insured against losses arising by
reason of any lawful advances; or

(c) there is a determination, based on a review of
readily available facts, that there is reason to
believe that the Trustee, officer, employee or agent
to be indemnified ultimately will be entitled to
indemnification, which determination shall be made
by:

(i) a majority of a quorum of Trustees who are
neither Interested Persons of the Trust nor
parties to the Proceedings; or

(ii) an independent legal counsel in a written
opinion.

Article VIII, Section 8.4 of the Registrant's Declaration of Trust further
provides:

Section 8.4. No Protection Against Certain 1940 Act Liabilities.
Nothing contained in Sections 8.1, 8.2 or 8.3 hereof shall protect any Trustee
or officer of the Trust from any liability to the Trust or its Holders to which
he would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Nothing contained in Sections 8.1, 8.2 or 8.3 hereof or in any agreement
of the character described in Section 4.1 or 4.2 hereof shall protect any
Investment Adviser to the Trust or any Series against any liability to the Trust
or any Series to which he would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of his or its
duties to the Trust or Series, or by reason of his or its reckless disregard to
his or its obligations and duties under the agreement pursuant to which he
serves as Investment Adviser to the Trust or any Series.

As permitted by Article VIII, Section 8.7, the Registrant may insure
its Trustees and officers against certain liabilities, and certain costs of
defending claims against such Trustees and officers, to the extent such Trustees
and officers are not found to have committed conduct constituting conflict of
interest, intentional non-compliance with statutes or regulations or dishonest,
fraudulent or criminal acts or omissions. The Registrant will purchase an
insurance policy to cover such indemnification obligation. The insurance policy
also will insure the Registrant against the cost of indemnification payments to
Trustees and officers under certain circumstances. Insurance will not be
purchased that protects, or purports to protect, any Trustee or officer from
liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of duty.

C-6

<PAGE>

The Registrant hereby undertakes that it will apply the indemnification
provisions of its Declaration of Trust and Bylaws in a manner consistent with
Release No. 11330 of the Securities and Exchange Commission under the 1940 Act
so long as the interpretation of Section 17(h) and 17(i) of such Act remain in
effect and are consistently applied.

ITEM 26. -- BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.

Set forth below is a list of each executive officer and partner of the
adviser indicating each business, profession, vocation or employment of a
substantial nature in which each such person or entity has been engaged since
May 1997 for his own account or in the capacity of director, officer, partner or
trustee.
<TABLE>
<CAPTION>
Other Substantial Business,
Profession, Vocation or
Name Positions With Adviser Employment
---------------------------------------- ------------------------------- --------------------------------------------
<S> <C> <C>
Peter John Gibbs Chairman and Chief Director of Mercury Asset
Executive Officer Management Ltd; Director of
Mercury Asset Management
International Channel Islands Ltd.
Carol Consuelo Brooke Deputy Chairman Director of Munich London
Investment Management Ltd.;
Director of Merrill Lynch (UK)
Pension Plan Trustees Limited;
Director of Benenden School
(Kent) Ltd., Cranbrook Kent,
TN17 4AA; Director of Mercury
Asset Management Pension
Trustee Co. Ltd.
David Morris Fitzgerald Scott Director Director of Corporation of St.
Lawrence College
Debra Ann C. Searle Secretary Secretary of Mercury Asset
Management Ltd., Secretary of
Mercury Asset Management
Group Ltd.
John Eric Nelson Director None
Steve Warner Golann Director None
</TABLE>

Set forth below is a list of the name and principal business address of
any company for which a person listed above serves in the capacity of director,
officer, employee, partner or trustee. The address of each is 33 King William
Street, London, England EC4R 9AS.

Ms. Searle also serves as officer of the following companies:

C-7

<PAGE>

Forum House Limited; Grosvenor Alternate Partner Limited; Grosvenor
General Partner Limited; Grosvenor Ventures Limited; Grosvenor Venture Managers
Limited; 33 King William Street Ltd.; Mercury Asset Management Employee Trust
Co. Ltd.; Mercury Asset Management Finance Ltd.; Mercury Asset Management Group
Services Ltd.; Mercury Asset Management Holdings Ltd.; Mercury Asset Management
No. 1 Limited; Mercury Asset Management No. 2 Limited; Mercury Asset Management
Pension Trustee Co. Ltd.; Mercury Executor & Trustee Co. Ltd.; Mercury (Finance)
Ltd.; Mercury Fund Managers Limited; Mercury Financial Services Ltd.; Mercury
Investment Management Limited; Mercury Investment Services Ltd.; Mercury
Investment Trust Managers Ltd.; Mercury Life Assurance Company Ltd.; Mercury
Life Limited; Mercury Life Nominees Ltd.; Mercury Private Equity Holdings Ltd.;
Mercury Rowan Mullens Ltd.; Munich London Investment Management Ltd.; Mercury
Private Equity MUST 3 Limited; Seligman Trust Limited; and Third Grosvenor
Limited.

The address of each of the following is 25 Ropemaker Place, London,
England EC4R 9AS.

Ms. Searle also serves as officer of the following companies:

Wimco Nominees Ltd.; SNC International (Holdings) Limited; SNC
Securities Limited; SNCS Limited; Storey Saver Limited; Merrill Lynch Private
Capital Limited; Merrill Lynch, Pierce, Fenner & Smith (Brokers & Dealers)
Limited; Merrill Lynch, Pierce, Fenner & Smith Limited; Mership Nominees
Limited; ML Europe Property Ltd.; ML Invest Holdings Limited; ML Invest Limited;
N.Y. Nominees Limited; Paramount Nominees Limited; Prismbond Limited; RNML
Limited; S.N.C. Nominees Limited; Sealion Nominees Limited; Smith Bros (Services
& Leasing) Limited; Smith Bros Nominees Limited; Smith Bros Participations
Limited; Smith Bros PLC; SNC Corporate Finance Limited; SNC Financial Services;
Merrill Lynch (UK) Pension Plan Trustees Limited; Merrill Lynch Capital Markets
Bank Limited; Merrill Lynch Equities Limited; Merrill Lynch Europe Funding;
Merrill Lynch Europe Holdings Limited; Merrill Lynch Europe PLC; Merrill Lynch
Financial Services Limited; Merrill Lynch Gilts (Nominees) Limited; Merrill
Lynch Gilts Holdings Limited; Merrill Lynch Gilts Investments Limited; Merrill
Lynch Gilts Limited; Merrill Lynch Group Holdings Limited; Merrill Lynch
International; Merrill Lynch International Bank Limited; Merrill Lynch
Investment Services Limited; Merrill Lynch Investments Limited; Merrill Lynch
Limited; Merrill Lynch Nominees Limited; Benson Nominees Limited; C.P.W.
Limited; Capital Markets; Chetwynd Nominees Limited; Citygate Nominees Limited;
and CLO Funding Limited.

Set forth below is a list of each executive officer and director of
Fund Asset Management, L.P. ("FAM") indicating each business, profession,
vocation or employment of a substantial nature in which each such person has
been engaged since May 1997 for his own account or in the capacity of director,
officer, partner or trustee.

C-8

<PAGE>

Other Substantial Business,
Profession, Vocation or
Name Positions With FAM Employment
--------------------------------------- --------------------------------- -------------------------------------------
<S> <C> <C>
ML & Co. Limited Partner Financial Services Holding
Company; Limited Partner of
Merrill Lynch Asset
Management, L.P. ("MLAM")
Fund Asset Management, Inc. Limited Partner Investment Advisory Services
Princeton Services General Partner General Partner of MLAM
Jeffrey M. Peek President President of MLAM; President
and Director of Princeton
Services; Executive Vice
President of ML & Co.;
Managing Director and Co-Head
of the Investment Banking
Division of Merrill Lynch in
1997
Terry K. Glenn Executive Vice President Executive Vice President of
MLAM; Executive Vice
President and Director of
Princeton Funds Distributor, Inc.;
Director of FDS; President of
Princeton Administrators, L.P.
Gregory A. Bundy Chief Operating Officer Chief Operating Officer and
and Managing Director Managing Director of MLAM
and FAM; Chief Operating
Officer and Managing Director of
Princeton Services; Co-CEO of
Merrill Lynch Australia from
1997 to 1999
Donald C. Burke Senior Vice President Senior Vice President and
and Treasurer Treasurer of MLAM since 1999;
Senior Vice President and
Treasurer of Princeton Services;
Vice President of Princeton
Funds Distributor, Inc.,; First
Vice President of MLAM from 1997
to 1999; Vice President of MLAM
from 1990 to 1997; Director of
Taxation of MLAM since 1990
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
Michael G. Clark Senior Vice President Senior Vice President of MLAM;
Senior Vice President of
Princeton Services; Director and
Treasurer of Princeton Funds
Distributor, Inc.
Robert C. Doll Senior Vice President Senior Vice President of MLAM
and FAM; Senior Vice President
of Princeton Services; Chief
Investment Officer of
Oppenheimer Funds, Inc. in 1999
and Executive Vice President
thereof from 1991 to 1999.
Linda L. Federici Senior Vice President Senior Vice President of MLAM;
Senior Vice President of
Princeton Services
Vincent R. Giordano Senior Vice President Senior Vice President of MLAM;
Senior Vice President of
Princeton Services
Michael J. Hennewinkel Senior Vice President, Senior Vice President, Secretary
Secretary and General and General Counsel of MLAM;
Counsel Senior Vice President of
Princeton Services
Philip L. Kirstein Senior Vice President Senior Vice President of MLAM;
Senior Vice President, General
Counsel, Director and Secretary
of Princeton Services
Debra W. Landsman-Yaros Senior Vice President Senior Vice President of MLAM;
Senior Vice President of
Princeton Services; Vice
President of Princeton Funds
Distributor, Inc.
Stephen M. M. Miller Senior Vice President Executive Vice President of
Princeton Administrators; Senior
Vice President of Princeton
Services
Joseph T. Monagle, Jr. Senior Vice President Senior Vice President of MLAM;
Senior Vice President of
Princeton Services
Brian A. Murdock Senior Vice President Senior Vice President of MLAM;
Senior Vice President of
Princeton Services
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
<S> <C> <C>
Gregory D. Upah Senior Vice President Senior Vice President of MLAM;
Senior Vice President of
Princeton Services
</TABLE>

Mr. Glenn is President and Mr. Burke is Vice President and Treasurer of
all or substantially all of the investment companies described in the following
two paragraphs. Mr. Glenn is a director of substantially all such companies.
Messrs. Giordano, Doll, and Monagle are directors or officers of one or more of
such companies.

FAM, located at P.O. Box 9011, Princeton, New Jersey 08543-9011, an
affiliate of the Investment Adviser, acts as the investment adviser for the
following open-end registered investment companies: CBA Money Fund, CMA
Government Securities Fund, CMA Money Fund, CMA Multi-State Municipal Series
Trust, CMA Tax-Exempt Fund, CMA Treasury Fund, The Corporate Fund Accumulation
Program, Inc., Financial Institutions Series Trust, Merrill Lynch Basic Value
Fund, Inc., Merrill Lynch California Municipal Series Trust, Merrill Lynch
Corporate Bond Fund, Inc., Merrill Lynch Corporate High Yield Fund, Inc.,
Merrill Lynch Emerging Tigers Fund, Inc., Merrill Lynch Federal Securities
Trust, Merrill Lynch Funds for Institutions Series, Merrill Lynch Multi-State
Limited Maturity Municipal Series Trust, Merrill Lynch Multi-State Municipal
Series Trust, Merrill Lynch Municipal Bond Fund, Inc., Merrill Lynch Phoenix
Fund, Inc., Merrill Lynch Special Value Fund, Inc., Merrill Lynch World Income
Fund, Inc. and The Municipal Fund Accumulation Program, Inc.; and the following
closed-end investment companies: Apex Municipal Fund, Inc., Corporate High Yield
Fund, Inc., Corporate High Yield Fund II, Inc., Corporate High Yield Fund III,
Inc., Debt Strategies Fund, Inc., Debt Strategies Fund II, Inc., Debt Strategies
Fund III, Inc., Income Opportunities Fund 1999, Inc., Income Opportunities Fund
2000, Inc., Merrill Lynch Municipal Strategy Fund, Inc., MuniAssets Fund, Inc.,
MuniEnhanced Fund, Inc., MuniHoldings Fund, Inc., MuniHoldings Fund II, Inc.,
MuniHoldings Insured Fund Inc., MuniHoldings Insured Fund II, Inc., MuniHoldings
Insured Fund III, Inc., MuniHoldings California Insured Fund, Inc., MuniHoldings
California Insured Fund II, Inc., MuniHoldings California Insured Fund III,
Inc., MuniHoldings California Insured Fund IV, Inc., MuniHoldings California
Insured Fund V, Inc., MuniHoldings Michigan Insured Fund, Inc., MuniHoldings
Michigan Insured Fund II, Inc., MuniHoldings New York Insured Fund, Inc.,
MuniHoldings New York Insured Fund II, Inc., MuniHoldings New York Fund III,
Inc., MuniHoldings New York Insured Fund IV, Inc., MuniHoldings Florida Insured
Fund, MuniHoldings Florida Insured Fund II, MuniHoldings Florida Insured Fund
III, MuniHoldings Florida Insured Fund IV, MuniHoldings Florida Insured Fund V,
MuniHoldings New Jersey Insured Fund, Inc., MuniHoldings New Jersey Insured Fund
II, Inc., MuniHoldings New Jersey Insured Fund III, Inc., MuniHoldings New
Jersey Insured Fund IV, Inc., MuniHoldings Pennsylvania Insured Fund,
MuniInsured Fund, Inc., MuniVest Fund, Inc., MuniVest Fund II, Inc., MuniVest
Florida Fund, MuniVest Michigan Insured Fund, Inc., MuniVest New Jersey Fund,
Inc., MuniVest Pennsylvania Insured Fund, MuniYield Arizona Fund, Inc.,
MuniYield California Fund, Inc., MuniYield California Insured Fund, Inc.,
MuniYield California Insured Fund II, Inc., MuniYield Florida Fund, Inc.,
MuniYield Florida Insured Fund, Inc., MuniYield Fund, Inc., MuniYield Insured
Fund, Inc., MuniYield Michigan Fund, Inc., MuniYield Michigan Insured Fund,
Inc., MuniYield New Jersey Fund, Inc., MuniYield New Jersey Insured Fund, Inc.,

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MuniYield New York Insured Fund, Inc., MuniYield New York Insured Fund II, Inc.,
MuniYield Pennsylvania Fund, MuniYield Quality Fund, Inc., MuniYield Quality
Fund II, Inc., Senior High Income Portfolio, Inc., and Worldwide DollarVest
Fund, Inc.

MLAM, located at P.O. Box 9011, Princeton, New Jersey 08543-9011, acts
as investment adviser for the following open-end registered investment
companies: Merrill Lynch Adjustable Rate Securities Fund, Inc., Merrill Lynch
Americas Income Fund, Inc., Merrill Lynch Asset Builder Program, Inc., Merrill
Lynch Asset Growth Fund, Inc., Merrill Lynch Asset Income Fund, Inc., Merrill
Lynch Capital Fund, Inc., Merrill Lynch Convertible Fund, Inc., Merrill Lynch
Developing Capital Markets Fund, Inc., Merrill Lynch Disciplined Equity Fund,
Inc., Merrill Lynch Dragon Fund, Inc., Merrill Lynch EuroFund, Merrill Lynch
Fundamental Growth Fund, Inc., Merrill Lynch Global Allocation Fund, Inc.,
Merrill Lynch Global Bond Fund for Investment and Retirement, Merrill Lynch
Global Growth Fund, Inc., Merrill Lynch Global Holdings, Inc., Merrill Lynch
Global Resources Trust, Merrill Lynch Global SmallCap Fund, Inc., Merrill Lynch
Global Technology Fund, Inc., Merrill Lynch Global Utility Fund, Inc., Merrill
Lynch Global Value Fund, Inc., Merrill Lynch Growth Fund, Merrill Lynch
Healthcare Fund, Inc., Merrill Lynch Intermediate Government Bond Fund, Merrill
Lynch International Equity Fund, Merrill Lynch Latin America Fund, Inc., Merrill
Lynch Middle East/Africa Fund, Inc., Merrill Lynch Municipal Series Trust,
Merrill Lynch Pacific Fund, Inc., Merrill Lynch Ready Assets Trust, Merrill
Lynch Retirement Series Trust, Merrill Lynch Series Fund, Inc., Merrill Lynch
Short-Term Global Income Fund, Inc., Merrill Lynch Strategic Dividend Fund,
Merrill Lynch Technology Fund, Inc., Merrill Lynch U.S. Treasury Money Fund,
Merrill Lynch U.S.A. Government Reserves, Merrill Lynch Utility Income Fund,
Inc., Merrill Lynch Variable Series Funds, Inc. and Hotchkis and Wiley Funds
(advised by Hotchkis and Wiley, a division of MLAM); and for the following
closed-end registered investment companies: Merrill Lynch High Income Municipal
Bond Fund, Inc., Merrill Lynch Senior Floating Rate Fund, Inc. and Merrill Lynch
Senior Floating Rate Fund II, Inc. MLAM also acts as sub-adviser to Merrill
Lynch World Strategy Portfolio and Merrill Lynch Basic Value Equity Portfolio,
two investment portfolios of EQ Advisors Trust.

Set forth below is a list of each executive officer and director of Turner
Investment Partners, Inc., the sub-adviser to the Mercury Master Select Growth
Portfolio, indicating each business, profession, vocation or employment of a
substantial nature in which each such person or entity has been engaged within
the last two fiscal years for his own account or in the capacity of director,
officer, partner or trustee.

Positions with Turner Other Substantial Business, Profession,
Name Investment Partners, Inc. Vocation or Employment
--------------------- ---------------------------- -----------------------------------------------------------
<S> <C> <C>
Stephen J. Kneeley Chief Operating Officer, Registered Representative, SEI Investments Distribution Co.
Secretary, President

Janet Rader Rote Director of Compliance Registered Representative, SEI Investments Distribution Co.

Thomas R. Trala CFO, Treasurer --

Mark D. Turner Vice Chairman, Director of --
Fixed Income

Robert E. Turner, Jr. Chairman, CIO --

</TABLE>

Turner Investment Partners, Inc., located at 1235 Westlakes Drive, Suite 350,
Berwyn, PA 19312, acts as investment adviser for the following open-end
registered investment companies: Turner Large Cap Growth Equity, Turner Growth
Equity, Turner Mid Cap Growth, Turner Small Cap Growth, Turner Micro Cap Growth,
Turner Top 20, Turner Technology, Turner Large Cap Focused, Turner International
Growth, Turner Short Duration Government Funds--One Year Portfolio, Turner
Short Duration Government Funds--Three Year Portfolio, Turner Core High Quality
Fixed Income and TIP Target Select Equity Funds.

ITEM 27. - PRINCIPAL UNDERWRITERS.

(a) Mercury Funds Distributor, a division of Princeton Funds
Distributor, Inc. ("MFD") acts as placement agent for the Registrant and as
principal underwriter for each of the following open-end investment companies:

Mercury Global Balanced Fund of Mercury Asset Management Funds, Inc.;
Mercury Gold and Mining Fund of Mercury Asset Management Funds, Inc.; Mercury
U.S. Large Cap Fund of Mercury Asset Management Funds, Inc.; Mercury U.S. Small
Cap Growth Fund of Mercury Asset Management Funds, Inc.; Mercury International
Fund of Mercury Asset Management Funds, Inc.; Mercury Pan-European Growth Fund
of Mercury Asset Management Funds, Inc.; Mercury Select Growth Fund of Mercury
Assets Management Funds, Inc.; Summit Cash Reserves Fund of Financial
Institutions Series Trust; Mercury V.I. U.S. Large Cap Fund of Mercury Asset
Management V.I. Funds, Inc.

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<PAGE>

A separate division of Princeton Funds Distributor, Inc. acts as the
principal underwriter for a number of other investment companies.

(b) Set forth below is information concerning each director and officer
of MFD. The principal business address of each such person is P.O. Box 9081,
Princeton, New Jersey 08543-9081, except that the address of Messrs. Crook,
Aldrich, Breen, Fatseas, and Wasel is One Financial Center, 23rd Floor, Boston,
Massachusetts 02111-2665.

<TABLE>
<CAPTION>
(2)
POSITIONS AND OFFICES (3)
(1) WITH PRINCETON FUNDS POSITIONS AND OFFICES
NAME DISTRIBUTOR, INC. WITH REGISTRANT
-------------------------- -------------------------------------- ---------------------------------
<S> <C> <C>
Terry K. Glenn President and Director Executive Vice President
Michael G. Clark Director and Treasurer None
Thomas J. Verage Director None
Robert W. Crook Senior Vice President None
Michael J. Brady Vice President None
William M. Breen Vice President None
James J. Fatseas Vice President None
Debra W. Landman-Yaros Vice President None
Michelle T. Lau Vice President None
Donald C. Burke Vice President Vice President and Treasurer
Salvatore Venezia Vice President None
William Wasel Vice President None
Robert Harris Secretary None
</TABLE>

ITEM 28. - LOCATION OF ACCOUNTS AND RECORDS.

All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940, as amended, and the rules
thereunder are maintained at the offices of:

(1) the registrant, Mercury Asset Management Master
Trust, 800 Scudders Mill Road, Plainsboro, New Jersey
08536;

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<PAGE>

(2) the custodian, Brown Brothers Harriman & Co., 40
Water Street, Boston, Massachusetts 02109;

(3) Mercury Asset Management International Ltd., the
investment adviser of International Portfolio,
Pan-European Growth Portfolio, U.S. Large Cap
Portfolio, and Gold and Mining Portfolio, 33 King
William Street, London EC4R 9AS, England, and Mercury
Asset Management US, a division of Fund Asset
Management, L.P., the investment adviser of U.S.
Small Cap Growth Portfolio and Select Growth
Portfolio, 800 Scudders Mill Road, Plainsboro, New
Jersey 08536 or 225 Liberty Street, New York, New
York 10080; and

(4) Fund Asset Management, L.P., the sub-adviser of
International Portfolio, Pan-European Growth
Portfolio, U.S. Large Cap Portfolio, and Gold and
Mining Portfolio, 800 Scudders Mill Road, Plainsboro,
New Jersey 08536, and Mercury Asset Management
International Ltd., the sub-adviser of U.S. Small Cap
Growth Portfolio, 33 King Williams Street, London
EC4R 9AS, England; and Turner Investment Partners,
Inc., the sub-adviser of Select Growth Portfolio,
1235 Westlakes Drive, Suite 350, Berwyn, PA 19312.

2. MANAGEMENT SERVICES.

Other than as set forth under the caption "Management, Organization,
and Capital Structure of the Fund" in Part A of the Registration Statement and
under "Investment Advisory and Other Services" in Part B of the Registration
Statement, the Registrant is not party to any management related service
contract.

3. UNDERTAKINGS.

None.

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<PAGE>

SIGNATURES

Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment to the Registration Statement to be
signed on its behalf by the undersigned, duly authorized, in the Township of
Plainsboro, and State of New Jersey, on the 19th day of June, 2000.

MERCURY ASSET MANAGEMENT MASTER TRUST
(Registrant)

By: /s/ Donald C. Burke
-----------------------------------------------
(Donald C. Burke, Treasurer and Vice President)

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<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
<S> <C>

1(k) -- Amendment No. 5 to Declaration of Trust of Registrant
1(l) -- Certificate of Amendment of Certificate of Trust
4(m) -- Investment Advisory Agreement between the Trust on behalf of Mercury Master
Select Growth Portfolio and Mercury Asset Management US, a division of Fund
Asset Management, L.P.
4(n) -- Sub-Advisory Agreement between Mercury Asset Management US, a
division of Fund Asset Management, L.P. and Turner Investment Partners, Inc.
8(k) -- Fee Waiver/Expense Reimbursement Agreement relating to Mercury
Master Select Growth Portfolio
10 -- Consent of Deloitte & Touche LLP, independent auditors for the Registrant
12(e) -- Certificate of Mercury Asset Management US, a division of Fund Asset Management,
L.P. with respect to Mercury Master Select Growth Portfolio.
</TABLE>