ANNUAL REPORT
MAY 31, 1999
Mercury
International [GRAPHIC OMITTED]
Fund
OF MERCURY ASSET
MANAGEMENT FUNDS, INC.
--------------------
M E R C U R Y
ASSET MANAGEMENT
--------------------
<PAGE>
MERCURY MASTER
INTERNATIONAL PORTFOLIO
SECTOR REPRESENTATION
================================================================================
A pie chart illustrating the following percentages
(As a Percentage of Net Assets as of May 31, 1999):
Materials 4.7%
Capital Equipment 13.5%
Energy 10.0%
Cash Equivalent 5.8%
Finance 19.4%
Services 27.1%
Consumer Goods 19.5%
GEOGRAPHIC ASSET MIX
================================================================================
A pie chart illustrating the following percentages
(As a Percentage of Net Assets as of May 31, 1999):
Japan 17.5%
Pacific Basin/Asia
(Ex Japan & Australia) 4.4%
Cash Equivalent 5.8%
Europe 68.0%
Latin America 1.1%
Australia 3.2%
May 31, 1999 2 Mercury International Fund
<PAGE>
DEAR SHAREHOLDER
Fiscal Year in Review
We are pleased to provide this first annual report for Mercury International
Fund. Since the Fund's inception (October 30, 1998) through May 31, 1999,
international stock markets initially staged a strong rally but, more recently,
have given back some of those gains. The difficult and uncertain environment
into which the Fund was launched led us to take a cautious approach toward
investing, particularly during November and December 1998. In fact, we were
deliberately defensive in terms of stock selection given uncertain global events
including the Russian debt crisis, the Latin American currency devaluations and
the unexpected, aggressive manner in which the US Federal Reserve Board cut
interest rates.
Throughout the Fund's short history, we have made the majority of Mercury Master
International Portfolio's investments in European equities. (For an explanation
of how the Fund invests, see the back cover of this report to shareholders.) We
continue to believe that Europe will provide investors with very attractive
opportunities over the next decade. The benefits of monetary union, the growing
"equity culture" and the increasing emphasis on both corporate restructuring and
shareholder value are likely to underpin equity valuations for some time, in our
view. In fact, we believe that these themes will drive European stock markets
higher over the medium term as Europe is several years behind the United States
in establishing these trends.
Since inception (October 30, 1998) through May 31, 1999, Mercury International
Fund's Class I, Class A, Class B and Class C Shares had total returns of +4.20%,
+4.00%, +3.60% and +3.60%, respectively. This compares with the total return of
+9.34% for the benchmark unmanaged Morgan Stanley Capital International Europe,
Asia and Far East (MSCI EAFE) Index for the same period. Stock selection
contributed positively to returns relative to the MSCI EAFE Index. However,
asset allocation contributed negatively to performance. Our underweight position
in Japanese equities relative to the benchmark was detrimental to performance.
While we continue to underweight Japan relative to the Index, we recently raised
our exposure as the environment there becomes gradually more favorable for
corporate restructuring.
Portfolio Activity
During the quarter ended May 31, 1999, our European equities heavily emphasized
sectors with relatively defensive earnings streams and companies with strong
franchises and superior profit profiles. Given the current demographics in
Europe, we favor the healthcare sector, and the Portfolio holds positions in
Glaxo Wellcome PLC, Novartis AG, SmithKline Beecham PLC and Roche Holding AG.
The attractive secular long-term growth prospects of the European
telecommunications industry, given the growing penetration of cellular use, led
us to invest in companies such as Vodafone Group PLC, Mannesmann AG and Swisscom
AG. Furthermore, the prospects for greater data transmission led to our
investments in Cable & Wireless PLC
May 31, 1999 3 Mercury International Fund
<PAGE>
and Telecom Italia SpA. Similarly, the technology sector is well represented by
our positions in Nokia Oyj, Telefonaktiebolaget LM Ericsson, Koninklijke (Royal)
Philips Electronics NV and SAP AG (Systeme, Anwendungen, Produkte in der
Datenverarbeitung), given the increasing application of cellular and other
information systems.
The prospect for further corporate activity within the European financials
sector led us to maintain our positions in Credit Suisse Group, Axa and Allianz
AG. We also favored companies with an emphasis on restructuring and an increased
focus on shareholder value such as Vivendi, Nestle SA, Siemens AG and
Koninklijke Numico NV.
More recently, European stock markets continued to be supported by corporate
activity. Over the past three months, we witnessed the strong merger and
acquisition activity. We continue to believe that this intense corporate
activity within Europe can only increase as companies position themselves to
take advantage of the "Eurozone."
Initially, the Portfolio had only a 10% weighting in Japanese equities. Our
caution toward this market was based on our belief that the economic situation
in Japan would worsen and the yen was likely to weaken, undermining any
potential returns to US dollar-based investors. However, we have become less
negative on the Japanese equity market as the environment there gradually
becomes more favorable for corporate restructuring. Although we remain skeptical
about expectations for a strong near-term economic recovery, we increased our
exposure to Japanese equities toward a more neutral position relative to the
Fund's benchmark.
Major purchases in Japan included Toyota Motor Corporation, Japan's largest
vehicle manufacturer, which is well placed to benefit from the nascent recovery
in Asian economies, and which has demonstrated its commitment to enhancing
efficiency. We also bought Murata Manufacturing Co., Ltd., an electronic
components company. We added to our position in Nippon Telegraph and Telephone
Corporation (NTT), the domestic national telecommunications company.
Investment Outlook
The recent rally in Japanese equities indicates that the consensus view of the
Japanese economy has become less negative. This could increase market
sensitivity to negative economic data and provide for us an opportunity to raise
exposure further into bouts of market weakness. News on corporate and
macroeconomic reform is likely to continue to be surprising in its scope and in
its breadth. However, investors may be disappointed with developments in the
real estate market since the clearing house for the banks' bad loan collateral
appears reluctant to release liquidity into the sector. We anticipate that the
widespread adoption of cost-cutting measures to improve profitability throughout
corporate Japan, though deflationary for the broad economy, would offer
attractive opportunities for investors as the culture of shareholder value
becomes more widely accepted.
May 31, 1999 4 Mercury International Fund
<PAGE>
As we became less negative regarding the outlook for Japan, we also became less
negative regarding Asia as a whole. Although Asia currently represents a very
small part of the overall portfolio, we are reviewing investment opportunities
throughout the region should the economic environment continue to improve.
In Conclusion
We thank you for your investment in Mercury International Fund, and we look
forward to serving your investment needs in the months and years ahead.
Sincerely,
/s/ Jeffrey Peek /s/ Charles Prideaux
Jeffrey Peek Charles Prideaux
President Portfolio Manager
July 15, 1999
May 31, 1999 5 Mercury International Fund
<PAGE>
OFFICERS AND DIRECTORS
Jeffrey M. Peek, Director and President
David O. Beim, Director
James T. Flynn, Director
W. Carl Kester, Director
Karen P. Robards, Director
Terry K. Glenn, Director and Executive Vice President
Peter John Gibbs, Senior Vice President
Donald C. Burke, Vice President and Treasurer
Robert E. Putney, III, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(888) 763-2260
May 31, 1999 6 Mercury International Fund
<PAGE>
FUND PERFORMANCE DATA
ABOUT FUND PERFORMANCE
The Fund offers four classes of shares, each with its own sales charge and
expense structure, allowing you to invest in the way that best suits your needs.
CLASS I SHARES incur a maximum initial sales charge of 5.25% and bear no ongoing
distribution and account maintenance fees. Class I shares are available only to
eligible investors.
CLASS A SHARES incur a maximum initial sales charge of 5.25% and an account
maintenance fee of 0.25% (but no distribution fee).
CLASS B SHARES are subject to a maximum contingent deferred sales charge of 4%
if redeemed during the first two years, decreasing to 3% for each of the next
two years and decreasing 1% each year thereafter to 0% after the sixth year. In
addition, Class B shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. These shares automatically convert to Class A
shares after approximately 8 years.
CLASS C SHARES are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. In addition, Class C shares may be subject to a 1%
contingent deferred sales charge if redeemed within one year after purchase.
None of the past results shown should be considered a representation of future
performance. Figures shown in the "Recent Performance Results" and "Aggregate
Total Return" tables assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each class of
shares will vary because of the different levels of account maintenance,
distribution and transfer agency fees applicable to each class, which are
deducted from the income available to be paid to shareholders.
May 31, 1999 7 Mercury International Fund
<PAGE>
PERFORMANCE DATA (CONTINUED)
TOTAL RETURN BASED ON A $10,000 INVESTMENT
================================================================================
A line graph depicting the growth of an investment in the Fund's Class I, Class
A, Class B & Class C Shares compared to growth of an investment in the MSCI
EAFE. Beginning and ending values are:
10/30/98** 5/99
Mercury International Fund+--
Class I Shares* $ 9,475 $ 9,873
Mercury International Growth Fund+--
Class A Shares* $ 9,475 $ 9,854
Mercury International Growth Fund+--
Class B Shares* $10,000 $ 9,960
Mercury International Growth Fund+--
Class C Shares* $10,000 $10,260
MSCI EAFE++ $10,000 $10,934
* Assuming maximum sales charge, transaction costs and other operating
expenses, including advisory fees.
** Commencement of operations.
+ The Fund invests all of its assets in Mercury Master International
Portfolio. The Portfolio invests primarily in stocks of companies located
outside of the United States that its management believes are undervalued
or have good prospects for earnings growth.
++ This unmanaged broad-based Index measures the total returns of developed
foreign stock markets in Europe, Asia and the Far East.
Past performance is not predictive of future performance.
May 31, 1999 8 Mercury International Fund
<PAGE>
PERFORMANCE DATA (CONCLUDED)
AGGREGATE TOTAL RETURN
================================================================================
% Return % Return
Without Sales With Sales
Class I Shares* Charge Charge**
- --------------------------------------------------------------------------------
Inception (10/30/98)
through 3/31/99 +6.80% +1.19%
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without Sales With Sales
Class A Shares* Charge Charge**
- --------------------------------------------------------------------------------
Inception (10/30/98)
through 3/31/99 +6.70% +1.10%
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without With
Class B Shares* CDSC CDSC**
- --------------------------------------------------------------------------------
Inception (10/30/98)
through 3/31/99 +6.30% +2.30%
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 4% and is reduced to 0% after 6
years.
** Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without With
Class C Shares* CDSC CDSC**
- --------------------------------------------------------------------------------
Inception (10/30/98)
through 3/31/99 +6.30% +5.30%
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after 1
year.
** Assuming payment of applicable contingent deferred sales charge.
RECENT PERFORMANCE RESULTS*
================================================================================
3 Month Since Inception
Total Return Total Return
- --------------------------------------------------------------------------------
Class I +0.97% +4.20%
- --------------------------------------------------------------------------------
Class A +0.87 +4.00
- --------------------------------------------------------------------------------
Class B +0.78 +3.60
- --------------------------------------------------------------------------------
Class C +0.78 +3.60
- --------------------------------------------------------------------------------
* Investment results shown do not reflect sales charges; results shown would
be lower if a sales charge was included. Total investment returns are
based on changes in the Fund's net asset values for the period shown, and
assume reinvestment of all dividends and capital gains at net asset value
on the ex-dividend date. The Fund's inception date is 10/30/98.
May 31, 1999 9 Mercury International Fund
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
As of May 31, 1999
- --------------------------------------------------------------------------------
MERCURY INTERNATIONAL FUND
================================================================================
Assets:
Investment in Mercury Master International Portfolio,
at value (identified cost--$339,131,307) (Note 1a) $345,374,015
Prepaid registration fees and other assets (Note 1d) 56,964
------------
Total assets 345,430,979
------------
- --------------------------------------------------------------------------------
Liabilities:
Payable to distributor (Note 2) 208,033
Payable to administrator (Note 2) 67,426
Accrued expenses and other liabilities 343,973
------------
Total liabilities 619,432
------------
- --------------------------------------------------------------------------------
Net Assets:
Net assets $344,811,547
============
- --------------------------------------------------------------------------------
Net Assets Consist of:
Class I Shares of Common Stock, $0.0001 par value, 100,000,000
shares authorized $ 326
Class A Shares of Common Stock, $0.0001 par value, 100,000,000
shares authorized 571
Class B Shares of Common Stock, $0.0001 par value, 100,000,000
shares authorized 1,375
Class C Shares of Common Stock, $0.0001 par value, 100,000,000
shares authorized 1,053
Paid-in capital in excess of par 336,497,203
Undistributed investment income--net 368,841
Undistributed realized capital gains on investments and foreign
currency transactions from the Portfolio--net 1,699,470
Unrealized appreciation on investments and foreign currency
transactions from the Portfolio--net 6,242,708
------------
Net assets $344,811,547
============
- --------------------------------------------------------------------------------
Net Asset Value:
Class I--Based on net assets of $33,958,106 and 3,259,636
shares outstanding $ 10.42
============
Class A--Based on net assets of $59,372,999 and 5,707,741
shares outstanding $ 10.40
============
Class B--Based on net assets of $142,434,114 and 13,753,721
shares outstanding $ 10.36
============
Class C--Based on net assets of $109,046,328 and 10,529,745
shares outstanding $ 10.36
============
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
May 31, 1999 10 Mercury International Fund
<PAGE>
STATEMENT OF OPERATIONS
For the Period October 30, 1998+ to May 31, 1999
- --------------------------------------------------------------------------------
MERCURY INTERNATIONAL FUND
================================================================================
Investment Income (Notes 1b & 1c):
<TABLE>
<S> <C> <C>
Investment income allocated from the Portfolio (net of $480,131 foreign
withholding tax) $ 4,736,897
Expenses allocated from the Portfolio (1,654,497)
------------
Net investment income from the Portfolio 3,082,400
------------
- ------------------------------------------------------------------------------------------------------
Expenses:
Account maintenance and distribution fees--Class B (Note 2) $ 743,103
Account maintenance and distribution fees--Class C (Note 2) 555,682
Administration fee (Note 2) 437,055
Registration fees (Note 1d) 156,108
Printing and shareholder reports 152,477
Transfer agent fees--Class B (Note 2) 99,764
Offering costs 94,100
Transfer agent fees--Class C (Note 2) 75,033
Account maintenance fees--Class A (Note 2) 72,826
Transfer agent fees--Class A (Note 2) 33,343
Transfer agent fees--Class I (Note 2) 18,060
Accounting services (Note 2) 1,612
Other 2,814
------------
Total expenses 2,441,977
------------
Investment income--net 640,423
------------
- ------------------------------------------------------------------------------------------------------
Realized & Unrealized Gain (Loss) from the Portfolio--Net:
Realized gain (loss) from the Portfolio on:
Investments--net 1,699,470
Foreign currency transactions--net (380,682) 1,318,788
------------
Unrealized appreciation on investments and foreign currency
transactions from the Portfolio--net 6,242,708
------------
Net realized and unrealized gain on investments and foreign
currency transactions from the Portfolio 7,561,496
------------
Net Increase in Net Assets Resulting from Operations $ 8,201,919
============
- ------------------------------------------------------------------------------------------------------
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
May 31, 1999 11 Mercury International Fund
<PAGE>
STATEMENT OF CHANGES
IN NET ASSETS
For the Period October 30, 1998+ to May 31, 1999
- --------------------------------------------------------------------------------
MERCURY INTERNATIONAL FUND
================================================================================
Increase in Net Assets:
- --------------------------------------------------------------------------------
Operations:
Investment income--net $ 640,423
Realized gain on investments and foreign currency transactions
from the Portfolio--net 1,318,788
Unrealized appreciation on investments and foreign currency
transactions from the Portfolio--net 6,242,708
------------
Net increase in net assets resulting from operations 8,201,919
------------
- --------------------------------------------------------------------------------
Capital Share Transactions (Note 4):
Net increase in net assets derived from capital share
transactions 336,459,628
------------
- --------------------------------------------------------------------------------
Net Assets:
Total increase in net assets 344,661,547
Beginning of period 150,000
------------
End of period* $344,811,547
============
- --------------------------------------------------------------------------------
* Undistributed investment income--net (Note 1g) $ 368,841
============
+ Commencement of operations.
See Notes to Financial Statements.
May 31, 1999 12 Mercury International Fund
<PAGE>
FINANCIAL HIGHLIGHTS
MERCURY INTERNATIONAL FUND
================================================================================
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
For the Period October 30, 1998+ to May 31, 1999
------------------------------------------------
Increase in Net Asset Value: Class I Class A Class B Class C
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00
------------------------------------------------
Investment income--net .06 .05 .01 .01
Realized and unrealized gain on investments
and foreign currency transactions from
the Portfolio--net .36 .35 .35 .35
------------------------------------------------
Total from investment operations .42 .40 .36 .36
------------------------------------------------
Net asset value, end of period $ 10.42 $ 10.40 $ 10.36 $ 10.36
================================================
- ----------------------------------------------------------------------------------------------
Total Investment Return:**
Based on net asset value per share 4.20%+++ 4.00%+++ 3.60%+++ 3.60%+++
================================================
- ----------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses++ 1.56%* 1.82%* 2.55%* 2.56%*
================================================
Investment income--net 1.21%* .96%* .12%* .14%*
================================================
- ----------------------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $33,958 $59,373 $142,434 $109,047
================================================
- ----------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++ Includes the Fund's share of the Portfolio's allocated expenses.
+++ Aggregate total investment return.
See Notes to Financial Statements.
May 31, 1999 13 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MERCURY INTERNATIONAL FUND
================================================================================
1 Significant Accounting Policies:
Mercury International Fund (the "Fund") is part of Mercury Asset
Management Funds, Inc. (the "Corporation"). The Fund is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The Fund seeks to achieve its investment objective by
investing all of its assets in the Mercury Master International Portfolio
(the "Portfolio") of Mercury Asset Management Master Trust (the "Trust"),
which has the same investment objective as the Fund. The value of the
Fund's investment in the Portfolio reflects the Fund's proportionate
interest in the net assets of the Portfolio. The performance of the Fund
is directly affected by the performance of the Portfolio. The financial
statements of the Portfolio, including the Schedule of Investments, are
included elsewhere in this report and should be read in conjunction with
the Fund's financial statements. Prior to commencement of operations on
October 30, 1998, the Fund had no operations other than those relating to
organizational matters and the issuance of 15,000 capital shares of the
Fund on July 29, 1998 to Mercury Asset Management International Ltd.
("Mercury International") for $150,000. The Fund's financial statements
are prepared in accordance with generally accepted accounting principles
which may require the use of management accruals and estimates. The Fund
offers four classes of shares. Class I and Class A Shares are sold with a
front-end sales charge. Class B and Class C Shares may be subject to a
contingent deferred sales charge. All classes of shares have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that Class A, Class B and Class C Shares bear certain
expenses related to the account maintenance of such shares, and Class B
and Class C Shares also bear certain expenses related to the distribution
of such shares. Each class has exclusive voting rights with respect to
matters relating to its account maintenance and distribution expenditures
(except that Class B Shares have certain voting rights with respect to
Class A distribution expenditures). The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of investments--Valuation of securities is discussed in Note
1a of the Portfolio's Notes to Financial Statements, which are included
elsewhere in this report.
(b) Income--The Fund's net investment income consists of the Fund's pro
rata share of the net investment income of the Portfolio, less all actual
and accrued expenses of the Fund determined in accordance with generally
accepted accounting principles.
(c) Income taxes--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies
and to distribute substantially all of its taxable income to shareholders.
Therefore, no Federal income tax
May 31, 1999 14 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
provision is required. Under the applicable foreign tax law, withholding
taxes may be imposed on interest, dividends and capital gains at various
rates.
(d) Prepaid registration fees--Prepaid registration fees are charged to
expenses as the related shares are issued.
(e) Dividends and distributions--Dividends and distributions paid by the
Fund are recorded on the ex-dividend dates.
(f) Investment transactions--Investment transactions are accounted for on
a trade date basis.
(g) Reclassification--Generally accepted accounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, current
year's permanent book/tax differences of $380,682 have been reclassified
between undistributed net realized capital gains and undistributed net
investment income and $109,100 have been reclassified between paid-in
capital in excess of par and undistributed net investment income. These
reclassifications have no effect on net assets or net asset values per
share.
2 Transactions with Affiliates:
The Corporation has entered into an Administration Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is Princeton
Services, Inc. ("PSI"), a wholly-owned subsidiary of Merrill Lynch & Co.,
Inc. ("ML & Co."), which is the limited partner. The Fund pays a monthly
fee at an annual rate of 0.25% of the Fund's average daily net assets for
the performance of administrative services (other than investment advice
and related portfolio activities) necessary for the operation of the Fund.
The Corporation has also entered into a Distribution Agreement and
Distribution Plans with Mercury Funds Distributor ("MFD" or the
"Distributor"), a division of Princeton Funds Distributor, Inc. ("PFD"), a
wholly-owned subsidiary of Merrill Lynch Group, Inc. Pursuant to the
Distribution Plans adopted by the Corporation in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the
Distributor ongoing account maintenance and distribution fees. The fees
are accrued daily and paid monthly at annual rates based upon the average
daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
==========================================================================
Class A 0.25% --
--------------------------------------------------------------------------
Class B 0.25% 0.75%
--------------------------------------------------------------------------
Class C 0.25% 0.75%
--------------------------------------------------------------------------
May 31, 1999 15 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of ML & Co., and
selected dealers also provide account maintenance and distribution
services to the Fund. The ongoing account maintenance fee compensates the
Distributor, MLPF&S and selected dealers for providing account maintenance
services to Class A, Class B and Class C shareholders. The ongoing
distribution fee compensates the Distributor, MLPF&S and selected dealers
for providing shareholder and distribution-related services to Class B and
Class C shareholders.
For the period October 30, 1998 to May 31, 1999, MFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the Fund's
Class I and Class A Shares as follows:
MFD MLPF&S
==========================================================================
Class I $101 $766,312
--------------------------------------------------------------------------
Class A $14,609 $450,622
--------------------------------------------------------------------------
For the period October 30, 1998 to May 31, 1999, MLPF&S received
contingent deferred sales charges of $145,894 and $39,498 relating to
transactions in Class B and Class C Shares, respectively.
Financial Data Services, Inc. ("FDS"), an indirect wholly-owned subsidiary
of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Corporation are officers and/or
directors or Trustees of the Trust, Mercury International, FAM, PSI, PFD,
FDS, and/or ML & Co.
3 Investments:
Increases and decreases in the Fund's investment in the Portfolio for the
period October 30, 1998 to May 31, 1999 were $339,385,515 and $4,655,396,
respectively.
4 Capital Share Transactions:
Net increase in net assets derived from capital share transactions was
$336,459,628 for the period October 30, 1998 to May 31, 1999.
Transactions in capital shares for each class were as follows:
Class I Shares for the Period October 30, 1998+
to May 31, 1999 Shares Dollar Amount
--------------------------------------------------------------------------
Shares sold 4,172,807 $ 42,867,726
Shares redeemed (916,921) (9,645,414)
---------- ------------
Net increase 3,255,886 $ 33,222,312
========== ============
--------------------------------------------------------------------------
+ Prior to October 30, 1998 (commencement of operations), the Fund issued
3,750 shares to Mercury International for $37,500.
May 31, 1999 16 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Class A Shares for the Period October 30, 1998+
to May 31, 1999 Shares Dollar Amount
- --------------------------------------------------------------------------------
Shares sold 6,270,524 $ 63,892,653
Shares redeemed (566,533) (5,972,511)
------------------------------
Net increase 5,703,991 $ 57,920,142
==============================
- --------------------------------------------------------------------------------
+ Prior to October 30, 1998 (commencement of operations), the Fund issued
3,750 shares to Mercury International for $37,500.
Class B Shares for the Period October 30, 1998+
to May 31, 1999 Shares Dollar Amount
- --------------------------------------------------------------------------------
Shares sold 14,517,982 $146,815,939
Shares redeemed (768,011) (8,017,841)
------------------------------
Net increase 13,749,971 $138,798,098
==============================
- --------------------------------------------------------------------------------
+ Prior to October 30, 1998 (commencement of operations), the Fund issued
3,750 shares to Mercury International for $37,500.
Class C Shares for the Period October 30, 1998+
to May 31, 1999 Shares Dollar Amount
- --------------------------------------------------------------------------------
Shares sold 11,118,122 $112,707,710
Shares redeemed (592,127) (6,188,634)
------------------------------
Net increase 10,525,995 $106,519,076
==============================
- --------------------------------------------------------------------------------
+ Prior to October 30, 1998 (commencement of operations), the Fund issued
3,750 shares to Mercury International for $37,500.
May 31, 1999 17 Mercury International Fund
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
Mercury International Fund
(One of the Series constituting Mercury Asset Management Funds, Inc.):
We have audited the accompanying statement of assets and liabilities of Mercury
International Fund as of May 31, 1999, the related statements of operations and
changes in net assets, and the financial highlights for the period from October
30, 1998 (commencement of operations) to May 31, 1999. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. 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 statements and financial highlights present
fairly, in all material respects, the financial position of Mercury
International Fund as of May 31, 1999, the results of its operations, the
changes in its net assets, and the financial highlights for the period from
October 30, 1998 (commencement of operations) to May 31, 1999 in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
July 19, 1999
May 31, 1999 18 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EUROPE
============================================================================================================
Belgium
Insurance 95,575 Fortis (B) $ 3,358,156 $ 3,071,183 0.9%
- ------------------------------------------------------------------------------------------------------------
Utilities-- 6,362 Electrabel SA 2,493,559 1,960,581 0.6
Electric & Gas
- ------------------------------------------------------------------------------------------------------------
Total Investments in Belgium 5,851,715 5,031,764 1.5
- ------------------------------------------------------------------------------------------------------------
Finland
Electrical & 104,846 Nokia Oyj 5,989,045 7,472,270 2.2
Electronics
- ------------------------------------------------------------------------------------------------------------
Total Investments in Finland 5,989,045 7,472,270 2.2
- ------------------------------------------------------------------------------------------------------------
France
Automobiles 34,759 Valeo SA 2,917,335 2,844,103 0.8
- ------------------------------------------------------------------------------------------------------------
Banking 13,785 Societe Generale 'A' 2,091,783 2,509,408 0.7
- ------------------------------------------------------------------------------------------------------------
Business/ 80,091 Vivendi 6,306,983 5,942,352 1.7
Public 80,091 Vivendi (Rights) (c) 0 82,858 0.0
Services -------------------------------------------
6,306,983 6,025,210 1.7
- ------------------------------------------------------------------------------------------------------------
Energy 10,463 Elf Aquitaine SA 1,324,388 1,517,616 0.4
Sources 41,533 Total SA 'B' 4,766,469 5,056,331 1.5
-------------------------------------------
6,090,857 6,573,947 1.9
- ------------------------------------------------------------------------------------------------------------
Financial 10,471 Compagnie Financiere de
Services Paribas (CFP) 1,222,118 1,137,988 0.3
- ------------------------------------------------------------------------------------------------------------
Insurance 35,095 Axa 4,390,294 4,052,507 1.2
- ------------------------------------------------------------------------------------------------------------
Leisure/ 18,780 Accor SA 4,077,716 4,615,824 1.4
Tourism
- ------------------------------------------------------------------------------------------------------------
Merchandising 3,703 Guilbert SA 513,126 537,105 0.2
24,671 Pinault-Printemps-Redoute SA 4,298,628 4,210,069 1.2
-------------------------------------------
4,811,754 4,747,174 1.4
- ------------------------------------------------------------------------------------------------------------
Metals-- 59,067 Usinor SA 681,519 806,129 0.2
Steel
- ------------------------------------------------------------------------------------------------------------
Total Investments in France 32,590,359 33,312,290 9.6
- ------------------------------------------------------------------------------------------------------------
Germany
Automobiles 25,155 DaimlerChrysler AG 2,247,744 2,175,247 0.6
- ------------------------------------------------------------------------------------------------------------
Banking 47,177 HypoVereinsbank 3,576,978 2,553,738 0.7
- ------------------------------------------------------------------------------------------------------------
Business/ 2,502 SAP AG (Systeme,
Public Anwendungen, Produkte
Services in der Datenverarbeitung)
(Preferred) 1,063,934 1,002,695 0.3
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 19 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EUROPE (continued)
============================================================================================================
Germany (concluded)
Chemicals 51,038 Bayer AG $ 2,087,735 $ 1,989,385 0.6%
- ------------------------------------------------------------------------------------------------------------
Electrical & 87,068 Siemens AG 5,720,681 5,868,601 1.7
Electronics
- ------------------------------------------------------------------------------------------------------------
Insurance 12,506 Allianz AG (Registered Shares) 4,326,140 3,424,018 1.0
- ------------------------------------------------------------------------------------------------------------
Telecom- 44,326 Mannesmann AG 5,018,249 6,068,008 1.8
munications
- ------------------------------------------------------------------------------------------------------------
Transpor- 54,501 Deutsche Lufthansa AG
tation--Airlines (Registered Shares) 1,201,625 1,173,243 0.4
- ------------------------------------------------------------------------------------------------------------
Utilities-- 32,673 Veba AG 1,825,782 1,867,638 0.5
Electric & Gas
- ------------------------------------------------------------------------------------------------------------
Total Investments
in Germany 27,068,868 26,122,573 7.6
- ------------------------------------------------------------------------------------------------------------
Italy
Banking 702,737 Unicredito Italiano SpA 3,791,715 3,311,964 0.9
- ------------------------------------------------------------------------------------------------------------
Broad- 1,146,380 Seat Pagine Gialle SpA 1,407,461 1,563,347 0.5
casting &
Publishing
- ------------------------------------------------------------------------------------------------------------
Business/ (euro)2,198,188 Tecnost International NV,
Public 0%** due 6/23/2004 2,347,215 2,315,484 0.7
Services 454,798 Tecnost SpA 1,057,286 1,059,838 0.3
-------------------------------------------
3,404,501 3,375,322 1.0
- ------------------------------------------------------------------------------------------------------------
Energy 303,203 ENI SpA 1,860,275 1,897,914 0.5
Sources
- ------------------------------------------------------------------------------------------------------------
Telecom- 727,847 Telecom Italia Mobile
munications (TIM) SpA 3,827,058 3,031,811 0.9
391,982 Telecom Italia SpA 2,506,190 2,134,126 0.6
-------------------------------------------
6,333,248 5,165,937 1.5
- ------------------------------------------------------------------------------------------------------------
Total Investments
in Italy 16,797,200 15,314,484 4.4
- ------------------------------------------------------------------------------------------------------------
Luxembourg
Banking 37,081 Safra Republic Holdings, SA 2,480,107 2,456,616 0.7
- ------------------------------------------------------------------------------------------------------------
Total Investments
in Luxembourg 2,480,107 2,456,616 0.7
- ------------------------------------------------------------------------------------------------------------
Netherlands
Broad- 78,072 Wolters Kluwer NV 'A' 3,760,699 3,145,111 0.9
casting &
Publishing
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 20 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EUROPE (continued)
============================================================================================================
Netherlands (concluded)
Chemicals 67,110 Akzo Nobel NV $ 2,737,766 $ 2,791,172 0.8%
- ------------------------------------------------------------------------------------------------------------
Electrical & 54,694 +Koninklijke (Royal) Philips
Electronics Electronics NV 3,714,701 4,701,018 1.4
- ------------------------------------------------------------------------------------------------------------
Energy 90,796 Royal Dutch Petroleum
Sources Company 4,341,111 5,066,689 1.4
- ------------------------------------------------------------------------------------------------------------
Food & 82,716 Koninklijke Numico NV 3,532,913 3,003,728 0.9
Household 79,332 Unilever NV 'A' 6,754,829 5,285,008 1.5
Products -------------------------------------------
10,287,742 8,288,736 2.4
- ------------------------------------------------------------------------------------------------------------
Insurance 82,867 ING Groep NV 4,552,244 4,438,046 1.3
- ------------------------------------------------------------------------------------------------------------
Total Investments in the
Netherlands 29,394,263 28,430,772 8.2
- ------------------------------------------------------------------------------------------------------------
Spain
Banking 190,503 Banco Santander Central
Hispano, SA 3,663,582 3,981,513 1.2
- ------------------------------------------------------------------------------------------------------------
Telecom- 90,433 Telefonica, SA 4,099,787 4,345,224 1.3
munications 1,969 Telefonica, SA (New Shares) 0 94,609 0.0
-------------------------------------------
4,099,787 4,439,833 1.3
- ------------------------------------------------------------------------------------------------------------
Total Investments in Spain 7,763,369 8,421,346 2.5
- ------------------------------------------------------------------------------------------------------------
Sweden
Appliances & 220,495 Electrolux AB 'B' 3,565,291 4,281,331 1.2
Household
Durables
- ------------------------------------------------------------------------------------------------------------
Electrical & 100,902 ABB AB 'A' 1,091,900 1,376,739 0.4
Electronics 162,473 Telefonaktiebolaget LM
Ericsson 'B' 4,051,620 4,348,403 1.3
-------------------------------------------
5,143,520 5,725,142 1.7
- ------------------------------------------------------------------------------------------------------------
Total Investments in Sweden 8,708,811 10,006,473 2.9
- ------------------------------------------------------------------------------------------------------------
Switzerland
Banking 16,394 Credit Suisse Group
(Registered Shares) 2,623,162 2,856,285 0.8
9,420 UBS AG (Registered Shares) 2,789,579 2,737,436 0.8
-------------------------------------------
5,412,741 5,593,721 1.6
- ------------------------------------------------------------------------------------------------------------
Business/ 6,516 Adecco SA
Public Services (Registered Shares) 2,809,110 3,422,935 1.0
- ------------------------------------------------------------------------------------------------------------
Food & 1,336 Nestle SA (Registered Shares) 2,703,532 2,411,124 0.7
Household
Products
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 21 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EUROPE (continued)
============================================================================================================
Switzerland (concluded)
Health & 3,125 Novartis AG
Personal Care (Registered Shares) $ 5,869,784 $ 4,552,926 1.3%
401 Roche Holding AG 4,858,717 4,260,460 1.3
-------------------------------------------
10,728,501 8,813,386 2.6
- ------------------------------------------------------------------------------------------------------------
Telecom- 6,946 Swisscom AG
munications (Registered Shares) 2,541,583 2,511,703 0.7
- ------------------------------------------------------------------------------------------------------------
Total Investments in
Switzerland 24,195,467 22,752,869 6.6
- ------------------------------------------------------------------------------------------------------------
United Kingdom
Aerospace & 385,963 British Aerospace PLC 3,004,900 2,544,631 0.7
Military
Technology
- ------------------------------------------------------------------------------------------------------------
Banking 143,541 Barclays PLC 3,183,673 4,350,830 1.3
403,988 Lloyds TSB Group PLC 5,336,191 5,336,641 1.5
-------------------------------------------
8,519,864 9,687,471 2.8
- ------------------------------------------------------------------------------------------------------------
Beverages & 249,706 British American Tobacco PLC 2,268,896 2,269,031 0.6
Tobacco 255,671 Diageo PLC 2,788,745 2,687,582 0.8
-------------------------------------------
5,057,641 4,956,613 1.4
- ------------------------------------------------------------------------------------------------------------
Broad- 380,937 Reed International PLC 3,063,901 2,775,301 0.8
casting &
Publishing
- ------------------------------------------------------------------------------------------------------------
Energy 344,168 BP Amoco PLC 5,319,566 6,155,584 1.8
Sources
- ------------------------------------------------------------------------------------------------------------
Health & 85,919 AstraZeneca Group PLC 3,560,349 3,413,199 1.0
Personal 238,054 Glaxo Wellcome PLC 7,772,279 6,678,135 1.9
Care 271,136 SmithKline Beecham PLC 3,569,025 3,533,924 1.0
-------------------------------------------
14,901,653 13,625,258 3.9
- ------------------------------------------------------------------------------------------------------------
Insurance 180,269 Allied Zurich PLC 2,450,150 2,297,628 0.7
171,465 CGU PLC 2,642,096 2,503,894 0.7
-------------------------------------------
5,092,246 4,801,522 1.4
- ------------------------------------------------------------------------------------------------------------
Merchan- 78,135 Dixons Group PLC 1,361,551 1,402,480 0.4
dising 86,985 Kingfisher PLC 1,239,083 1,092,655 0.3
178,758 Marks & Spencer PLC 1,271,871 1,127,736 0.3
876,227 Tesco PLC 2,489,939 2,549,979 0.8
-------------------------------------------
6,362,444 6,172,850 1.8
- ------------------------------------------------------------------------------------------------------------
Mining 18,000 +Anglo American PLC 912,452 817,485 0.2
- ------------------------------------------------------------------------------------------------------------
Recreation & 186,636 EMI Group PLC 1,128,290 1,316,397 0.4
Other Con-
sumer Goods
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 22 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EUROPE (concluded)
============================================================================================================
United Kingdom (concluded)
Telecom- 292,601 British Telecommunications
munications PLC $ 4,749,022 $ 4,877,217 1.4%
276,183 Cable & Wireless PLC 3,475,685 3,405,127 1.0
321,750 Vodafone Group PLC 5,334,846 6,125,563 1.8
-------------------------------------------
13,559,553 14,407,907 4.2
- ------------------------------------------------------------------------------------------------------------
Transpor- 233,994 The Peninsular and Oriental
tation-- Steam Navigation Company 2,608,121 3,417,001 1.0
Shipping
- ------------------------------------------------------------------------------------------------------------
Utilities-- 611,520 BG PLC 3,803,102 3,360,987 1.0
Electric & 202,992 National Grid Group PLC 1,645,431 1,378,131 0.4
Gas -------------------------------------------
5,448,533 4,739,118 1.4
- ------------------------------------------------------------------------------------------------------------
Total Investments in the
United Kingdom 74,979,164 75,417,138 21.8
- ------------------------------------------------------------------------------------------------------------
Total Investments in Europe 235,818,368 234,738,595 68.0
- ------------------------------------------------------------------------------------------------------------
LATIN AMERICA
============================================================================================================
Brazil
Banking 11,200 Uniao de Bancos Brasileiros
SA (Unibanco) (GDR) (b) 307,497 252,700 0.1
- ------------------------------------------------------------------------------------------------------------
Beverages & 21,600 Companhia Cervejaria
Tobacco Brahma SA PN (Preferred)
(ADR) (a) 249,992 221,400 0.1
- ------------------------------------------------------------------------------------------------------------
Energy 24,600 Companhia Paranaense de
Sources Energia SA (Copel) (ADR) (a) 202,861 184,500 0.0
- ------------------------------------------------------------------------------------------------------------
Telecom- 5,600 Tele Centro Sul Participacoes
munications SA (ADR) (a) 337,748 302,400 0.1
9,400 Telesp Celular Participacoes
SA (ADR) (a) 245,164 219,138 0.0
11,300 Telesp Participacoes SA
(ADR) (a) 287,984 247,188 0.1
-------------------------------------------
870,896 768,726 0.2
- ------------------------------------------------------------------------------------------------------------
Total Investments in Brazil 1,631,246 1,427,326 0.4
- ------------------------------------------------------------------------------------------------------------
Mexico
Beverages & 12,300 Fomento Economico Mexicano,
Tobacco SA de CV (ADR) (a) 482,919 410,513 0.1
- ------------------------------------------------------------------------------------------------------------
Broad- 22,000 +Grupo Televisa, SA de CV
casting & (GDR) (b) 988,071 919,875 0.3
Publishing
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 23 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LATIN AMERICA (concluded)
============================================================================================================
Mexico (concluded)
Telecom- 15,100 Telefonos de Mexico, SA
munications de CV (ADR) (a) $ 1,222,274 $ 1,207,056 0.3%
- ------------------------------------------------------------------------------------------------------------
Total Investments in Mexico 2,693,264 2,537,444 0.7
- ------------------------------------------------------------------------------------------------------------
Total Investments in
Latin America 4,324,510 3,964,770 1.1
- ------------------------------------------------------------------------------------------------------------
PACIFIC BASIN/ASIA
============================================================================================================
Australia
Banking 318,000 Colonial Limited 1,143,810 1,137,955 0.3
120,000 Commonwealth Bank of
Australia 1,787,941 1,933,554 0.6
-------------------------------------------
2,931,751 3,071,509 0.9
- ------------------------------------------------------------------------------------------------------------
Beverages & 609,000 Foster's Brewing Group
Tobacco Limited 1,632,901 1,729,090 0.5
- ------------------------------------------------------------------------------------------------------------
Business/ 34,000 Brambles Industries Limited 988,468 909,063 0.3
Public Services
- ------------------------------------------------------------------------------------------------------------
Electrical & 488,000 Telstra Corporation Limited 2,225,474 2,419,912 0.7
Electronics
- ------------------------------------------------------------------------------------------------------------
Merchan- 137,000 Coles Myer Limited 737,127 718,168 0.2
dising
- ------------------------------------------------------------------------------------------------------------
Metals/ 110,000 Rio Tinto Limited 1,539,110 1,547,183 0.4
Non--Ferrous
- ------------------------------------------------------------------------------------------------------------
Recreation & 110,000 TABCORP Holdings Limited 790,751 767,115 0.2
Other Consumer
Goods
- ------------------------------------------------------------------------------------------------------------
Total Investments in
Australia 10,845,582 11,162,040 3.2
- ------------------------------------------------------------------------------------------------------------
Hong Kong
Banking 23,000 HSBC Holdings PLC 609,684 750,451 0.2
87,203 HSBC Holdings PLC (GBP) 2,608,078 2,912,136 0.9
-------------------------------------------
3,217,762 3,662,587 1.1
- ------------------------------------------------------------------------------------------------------------
Industrial-- 219,000 Hutchison Whampoa Limited 1,797,466 1,821,705 0.5
Components
- ------------------------------------------------------------------------------------------------------------
Telecom- 128,800 Hong Kong
munications Telecommunications Ltd. 258,830 296,502 0.1
- ------------------------------------------------------------------------------------------------------------
Transpor- 770,000 Cathay Pacific Airways 1,164,987 1,171,782 0.3
tation--
Airlines
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 24 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PACIFIC BASIN/ASIA (continued)
============================================================================================================
Hong Kong (concluded)
Utilities-- 1,213,100 Hong Kong and China Gas
Electric & Company Ltd. $ 1,690,021 $ 1,720,931 0.5%
Gas
- ------------------------------------------------------------------------------------------------------------
Total Investments in
Hong Kong 8,129,066 8,673,507 2.5
- ------------------------------------------------------------------------------------------------------------
Japan
Appliances & 69,000 Matsushita Electric Industrial
Household Company, Ltd. 1,165,149 1,251,947 0.4
Durables 23,000 Sony Corporation 1,852,668 2,164,706 0.6
-------------------------------------------
3,017,817 3,416,653 1.0
- ------------------------------------------------------------------------------------------------------------
Automobiles 43,000 Honda Motor Co., Ltd. 1,597,243 1,767,026 0.5
80,000 Toyota Motor Corporation 2,376,528 2,187,241 0.7
-------------------------------------------
3,973,771 3,954,267 1.2
- ------------------------------------------------------------------------------------------------------------
Banking 123,000 The Bank of Tokyo-Mitsubishi,
Ltd. 1,368,600 1,650,870 0.5
110,000 The Sanwa Bank, Ltd. 956,769 1,069,925 0.3
122,000 The Sumitomo Bank, Ltd. 1,413,645 1,478,757 0.4
-------------------------------------------
3,739,014 4,199,552 1.2
- ------------------------------------------------------------------------------------------------------------
Beverages & 185 Japan Tobacco, Inc. 1,752,847 1,854,598 0.5
Tobacco
- ------------------------------------------------------------------------------------------------------------
Building 150,000 Sekisui Chemical Co., Ltd. 896,127 929,577 0.3
Materials &
Components
- ------------------------------------------------------------------------------------------------------------
Chemicals 395,000 Asahi Chemical Industry
Co., Ltd. 1,832,528 2,146,810 0.6
246,000 Mitsui Chemicals Inc. 1,153,009 1,251,400 0.4
370,000 Toray Industries, Inc. 1,788,578 1,799,420 0.5
-------------------------------------------
4,774,115 5,197,630 1.5
- ------------------------------------------------------------------------------------------------------------
Data 135,000 Fujitsu Limited 1,605,082 2,259,321 0.7
Processing &
Reproduction
- ------------------------------------------------------------------------------------------------------------
Electrical & 222,000 Hitachi Ltd. 1,388,021 1,635,112 0.5
Electronics 161 NTT Data Corporation 737,169 1,072,444 0.3
-------------------------------------------
2,125,190 2,707,556 0.8
- ------------------------------------------------------------------------------------------------------------
Electronic 107,000 Alpine Electronics 1,229,165 1,223,364 0.4
Components/ 16,000 Fujitsu Support and Service
Instruments Inc. (FSAS) 963,473 1,855,841 0.5
31,000 Murata Manufacturing Co.,
Ltd. 1,872,284 1,713,090 0.5
-------------------------------------------
4,064,922 4,792,295 1.4
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 25 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PACIFIC BASIN/ASIA (continued)
============================================================================================================
Japan (concluded)
Energy 252,000 Mitsui Mining & Smelting
Sources Co., Ltd. $ 1,294,198 $ 1,196,321 0.3%
- ------------------------------------------------------------------------------------------------------------
Financial 141,000 The Nomura Securities
Services Co., Ltd. 1,216,534 1,408,832 0.4
- ------------------------------------------------------------------------------------------------------------
Food & 77,000 Kao Corporation 1,649,291 2,117,978 0.6
Household
Products
- ------------------------------------------------------------------------------------------------------------
Health & 41,000 Takeda Chemical Industries 1,405,874 1,824,109 0.5
Personal Care
- ------------------------------------------------------------------------------------------------------------
Industrial-- 174,000 Minebea Company Ltd. 1,693,988 1,732,792 0.5
Components
- ------------------------------------------------------------------------------------------------------------
Insurance 91,000 The Tokio Marine & Fire
Insurance Co. Ltd. 1,045,405 995,195 0.3
- ------------------------------------------------------------------------------------------------------------
Machinery & 63,000 Komori Corporation 1,230,653 1,077,838 0.3
Engineering 662,000 Sumitomo Heavy
Industries, Ltd. 1,552,659 1,535,708 0.5
-------------------------------------------
2,783,312 2,613,546 0.8
- ------------------------------------------------------------------------------------------------------------
Merchan- 71,000 JUSCO Co., Ltd. 1,180,026 1,347,059 0.4
dising 27,000 Tokyo Electron Limited 1,144,309 1,492,046 0.4
-------------------------------------------
2,324,335 2,839,105 0.8
- ------------------------------------------------------------------------------------------------------------
Metals-- 875,000 Nippon Steel Corporation 1,613,102 1,841,342 0.5
Steel
- ------------------------------------------------------------------------------------------------------------
Real Estate 154,000 Mitsubishi Estate Company,
Limited 1,491,996 1,467,274 0.4
- ------------------------------------------------------------------------------------------------------------
Recreation & 14,000 Nintendo Company Ltd. 1,220,667 1,647,059 0.5
Other Con-
sumer Goods
- ------------------------------------------------------------------------------------------------------------
Telecom- 58 NTT Mobile Communication
munications Network, Inc. 2,284,613 3,176,305 0.9
490 Nippon Telegraph & Telephone
Corporation (NTT) 4,260,498 4,790,389 1.4
-------------------------------------------
6,545,111 7,966,694 2.3
- ------------------------------------------------------------------------------------------------------------
Textiles & 24,000 World Co., Ltd. 1,335,085 1,457,498 0.4
Apparel
- ------------------------------------------------------------------------------------------------------------
Utilities-- 90,000 Tokyo Electric Power 2,067,291 1,964,789 0.6
Electric &
Gas
- ------------------------------------------------------------------------------------------------------------
Total Investments in Japan 53,635,074 60,383,983 17.5
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 26 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PACIFIC BASIN/ASIA (continued)
============================================================================================================
Singapore
Broad- 105,000 Singapore Press
casting & Holdings Ltd. $ 1,355,894 $ 1,436,938 0.4%
Publishing
- ------------------------------------------------------------------------------------------------------------
Transpor- 102,000 Singapore Airlines Ltd.
tation-- 'Foreign' 883,303 910,873 0.3
Airlines
- ------------------------------------------------------------------------------------------------------------
Total Investments in
Singapore 2,239,197 2,347,811 0.7
- ------------------------------------------------------------------------------------------------------------
South Korea
Banking 44,000 Kookmin Bank (GDR) (b) (d) 608,960 627,000 0.2
- ------------------------------------------------------------------------------------------------------------
Electronic 11,800 Samsung Electronics
Components/ (GDR) (b) (d) 489,582 435,420 0.1
Instruments
- ------------------------------------------------------------------------------------------------------------
Metals-- 18,000 Pohang Iron & Steel Company
Steel Ltd. (ADR) (a) 467,955 455,625 0.1
- ------------------------------------------------------------------------------------------------------------
Telecom- 2,500 +Korea Telecom Corporation
munications (ADR) (a) 68,900 79,531 0.0
- ------------------------------------------------------------------------------------------------------------
Utilities-- 36,000 Korea Electric Power
Electric & Corporation (ADR) (a) 558,972 614,250 0.2
Gas
- ------------------------------------------------------------------------------------------------------------
Total Investments in
South Korea 2,194,369 2,211,826 0.6
- ------------------------------------------------------------------------------------------------------------
Taiwan
Data 18,700 Siliconware Precision
Processing & Industries Company (GDR) (b) 198,594 207,570 0.0
Reproduction 23,000 +Taiwan Semiconductor
Manufacturing Company Ltd.
(ADR) (a) 549,410 602,313 0.2
-------------------------------------------
748,004 809,883 0.2
- ------------------------------------------------------------------------------------------------------------
Electrical & 16,600 +Winbond Electronics
Electronics Corporation (GDR) (b) 195,714 187,580 0.1
- ------------------------------------------------------------------------------------------------------------
Metals-- 15,200 China Steel Corp. (GDR) (b) 252,168 201,400 0.1
Steel
- ------------------------------------------------------------------------------------------------------------
Total Investments in Taiwan 1,195,886 1,198,863 0.4
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 27 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONCLUDED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PACIFIC BASIN/ASIA (concluded)
============================================================================================================
Thailand
Banking 103,000 +Thai Farmers Bank Public
Company Limited 'Foreign' $ 283,267 $ 283,028 0.1%
- ------------------------------------------------------------------------------------------------------------
Business/ 28,000 +Advanced Info Service Public
Public Company Limited 'Foreign' 315,187 340,948 0.1
Services
- ------------------------------------------------------------------------------------------------------------
Total Investments in Thailand 598,454 623,976 0.2
- ------------------------------------------------------------------------------------------------------------
Total Investments in the
Pacific Basin/Asia 78,837,628 86,602,006 25.1
- ------------------------------------------------------------------------------------------------------------
Total Investments $318,980,506 325,305,371 94.2
============
Time Deposit* 13,974,000 4.0
Other Assets Less Liabilities 6,094,749 1.8
------------------------
Net Assets $345,374,120 100.0%
========================
- ------------------------------------------------------------------------------------------------------------
</TABLE>
+ Non-income producing security.
* Time deposit bears interest at 4.75% and matures on 6/01/1999.
** As of May 31, 1999, the coupon rate has not been determined.
(a) American Depositary Receipts (ADR).
(b) Global Depositary Receipts (GDR).
(c) The rights may be exercised until 6/07/1999.
(d) The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
See Notes to Financial Statements.
May 31, 1999 28 Mercury International Fund
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
As of May 31, 1999
- --------------------------------------------------------------------------------
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
<TABLE>
<S> <C> <C>
Assets:
Investments, at value (identified cost--$318,980,506) (Note 1a) $325,305,371
Foreign cash (Note 1c) 1,267,611
Time deposit (Note 1c) 13,974,000
Receivables:
Securities sold $ 10,721,752
Dividends 1,522,102
Contributions 1,238,130
Interest 1,844 13,483,828
------------
Other assets 27,040
------------
Total assets 354,057,850
------------
- ---------------------------------------------------------------------------------------------
Liabilities:
Payables:
Securities purchased 7,650,131
Withdrawals 552,946
Investment adviser (Note 2) 202,507 8,405,584
------------
Accrued expenses and other liabilities 278,146
------------
Total liabilities 8,683,730
------------
- ---------------------------------------------------------------------------------------------
Net Assets:
Net assets $345,374,120
============
- ---------------------------------------------------------------------------------------------
Net Assets Consist of:
Partners' capital $339,131,408
Unrealized appreciation on investments and foreign currency
transactions--net 6,242,712
------------
Net assets $345,374,120
============
- ---------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
May 31, 1999 29 Mercury International Fund
<PAGE>
STATEMENT OF OPERATIONS
For the Period October 30, 1998+ to May 31, 1999
- --------------------------------------------------------------------------------
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
<TABLE>
<S> <C> <C>
Investment Income (Notes 1d & 1e):
Dividends (net of $480,131 foreign withholding tax) $ 3,263,960
Interest and discount earned 1,472,938
-----------
Total income 4,736,898
-----------
- ----------------------------------------------------------------------------------------
Expenses:
Investment advisory fees (Note 2) $ 1,312,369
Custodian fees 229,333
Accounting services (Note 2) 65,779
Trustees' fees and expenses 24,854
Offering costs 15,000
Professional fees 5,000
Pricing fees 588
Other 1,574
-----------
Total expenses 1,654,497
-----------
Investment income--net 3,082,401
-----------
- ----------------------------------------------------------------------------------------
Realized & Unrealized Gain (Loss) on Investments &
Foreign Currency Transactions--Net
(Notes 1b, 1c, 1e & 3):
Realized gain (loss) from:
Investments--net 1,699,470
Foreign currency transactions--net (380,682) 1,318,788
-----------
Unrealized appreciation/depreciation on:
Investments--net 6,324,865
Foreign currency transactions--net (82,153) 6,242,712
--------------------------
Net realized and unrealized gain on investments and foreign
currency transactions 7,561,500
-----------
Net Increase in Net Assets Resulting from Operations $10,643,901
===========
- ----------------------------------------------------------------------------------------
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
May 31, 1999 30 Mercury International Fund
<PAGE>
STATEMENT OF CHANGES
IN NET ASSETS
For the Period October 30, 1998+ to May 31, 1999
- --------------------------------------------------------------------------------
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
Increase in Net Assets:
- --------------------------------------------------------------------------------
Operations:
Investment income--net $ 3,082,401
Realized gain on investments and foreign currency transactions--net 1,318,788
Unrealized appreciation on investments and foreign currency
transactions--net 6,242,712
------------
Net increase in net assets resulting from operations 10,643,901
------------
- --------------------------------------------------------------------------------
Net Capital Contributions:
Increase in net assets derived from net capital contributions 334,730,219
------------
- --------------------------------------------------------------------------------
Net Assets:
Total increase in net assets 345,374,120
Beginning of period --
------------
End of period $345,374,120
============
- --------------------------------------------------------------------------------
+ Commencement of operations.
See Notes to Financial Statements.
May 31, 1999 31 Mercury International Fund
<PAGE>
FINANCIAL HIGHLIGHTS
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
The following ratios have been derived from information For the Period
provided in the financial statements. October 30, 1998+
to May 31, 1999
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses .95%*
===========
Investment income--net 1.76%*
===========
- --------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 345,374
===========
Portfolio turnover 24.19%
===========
- --------------------------------------------------------------------------------
* Annualized.
+ Commencement of operations.
See Notes to Financial Statements.
May 31, 1999 32 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
1 Significant Accounting Policies:
Mercury Master International Portfolio (the "Portfolio") is part of
Mercury Asset Management Master Trust (the "Trust"). The Trust is
registered under the Investment Company Act of 1940 and is organized as a
Delaware business trust. The Portfolio's financial statements are prepared
in accordance with generally accepted accounting principles which may
require the use of management accruals and estimates. The following is a
summary of significant accounting policies followed by the Portfolio.
(a) Valuation of investments--Portfolio securities that are traded on
stock exchanges are valued at the last sale price 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 the last available
ask price for short positions. Securities traded in the over-the-counter
market are valued at the last available bid price prior to the time of
valuation. Securities traded both in the over-the-counter market and on a
stock exchange are valued according to the broadest and most
representative market. Short positions in securities traded in the
over-the-counter market are valued at the last available ask price prior
to the time of valuation. Options written or purchased are valued at the
last sale price in the case of exchange-traded options. In the case of
options traded in the over-the-counter market, valuation is the last asked
price (options written) or the last bid price (options purchased).
Short-term securities are valued at amortized cost, which approximates
market value. Other investments, including 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 market
value, as determined in good faith by or under the direction of the
Trust's Board of Trustees.
(b) Derivative financial instruments--The Portfolio may engage in various
portfolio investment strategies to seek to increase its return by hedging
its holdings against adverse movements in the equity, debt and currency
markets. Losses may arise due to changes in the value of the contract or
if the counterparty does not perform under the contract.
o Financial futures contracts--The Portfolio may purchase or sell
financial futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the intended
purchase of securities. Upon entering into a contract, the Portfolio
deposits and maintains as collateral such initial margin as required by
the exchange on which the transaction is effected. Pursuant to the
contract, the Portfolio agrees to receive from or pay to the broker an
amount of cash equal to the daily fluctuation in value of the contract.
Such receipts or payments are known as variation margin and are recorded
by the Portfolio as unrealized gains or losses. When the contract is
May 31, 1999 33 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
closed, the Portfolio records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and
the value at the time it was closed.
o Options--The Portfolio is authorized to purchase and write call and put
options. When the Portfolio writes an option, an amount equal to the
premium received by the Portfolio is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently marked
to market to reflect the current market value of the option written. When
a security is purchased or sold through an exercise of an option, the
related premium paid (or received) is added to (or deducted from) the
basis of the security acquired or deducted from (or added to) the proceeds
of the security sold. When an option expires (or the Portfolio enters into
a closing transaction), the Portfolio realizes a gain or loss on the
option to the extent of the premiums received or paid (or a gain or loss
to the extent that the cost of the closing transaction exceeds the premium
paid or received).
Written and purchased options are non-income producing investments.
o Forward foreign exchange contracts--The Portfolio is authorized to enter
into forward foreign exchange contracts as a hedge against either specific
transactions or portfolio positions. Such contracts are not entered on the
Portfolios' records. However, the effect on operations is recorded from
the date the Portfolio enters into such contracts.
o Foreign currency options and futures--The Portfolio may also purchase or
sell listed or over-the-counter foreign currency options, foreign currency
futures and related options on foreign currency futures as a short or long
hedge against possible variations in foreign exchange rates. Such
transactions may be effected with respect to hedges on non-US
dollar-denominated securities owned by the Portfolio, sold by the
Portfolio but not yet delivered, or committed or anticipated to be
purchased by the Portfolio.
(c) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized.
Assets and liabilities denominated in foreign currencies are valued at the
exchange rate at the end of the period. Foreign currency transactions are
the result of settling (realized) or valuing (unrealized) assets or
liabilities expressed in foreign currencies into US dollars. Realized and
unrealized gains or losses from investments include the effects of foreign
exchange rates on investments.
(d) Income taxes--The Portfolio is classified as a partnership for Federal
income tax purposes. As a partnership for Federal income tax purposes, the
Portfolio will not incur Federal income tax liability. Items of
partnership income, gain, loss and deduction will
May 31, 1999 34 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
pass through to investors as partners in the Portfolio. Therefore, no
Federal income tax provision is required. Under the applicable foreign tax
law, withholding taxes may be imposed on interest, dividends, and capital
gains at various rates.
(e) Security transactions and investment income--Security transactions are
accounted for on the date the securities are purchased or sold (the trade
dates). Dividend income is recorded on the ex-dividend dates. Dividends
from foreign securities where the ex-dividend date may have passed are
subsequently recorded when the Portfolio has determined the ex-dividend
date. Interest income (including amortization of discount) is recognized
on the accrual basis. Realized gains and losses on security transactions
are determined on the identified cost basis.
2 Investment Advisory Agreement and Transactions with Affiliates:
The Trust has entered into an Investment Advisory Agreement with Mercury
Asset Management International Ltd. ("Mercury International"), an
affiliate of Fund Asset Management, L.P. ("FAM"). The general partner of
FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited
partner.
Mercury International is responsible for the management of the Portfolios'
investments and provides the necessary personnel, facilities, equipment
and certain other services necessary to the operations of the Portfolio.
For such services, the Portfolio pays a monthly fee at an annual rate of
0.75% of the average daily value of the Portfolios' net assets. The Trust
has entered into a Sub-Advisory Agreement with FAM with respect to the
Portfolio, pursuant to which FAM provides investment advisory services
with respect to the Portfolio's daily cash assets. Mercury International
has agreed to pay FAM a fee in an amount to be determined from time to
time by both parties but in no event in excess of the amount that Mercury
International actually receives for providing services to the Trust
pursuant to the Investment Advisory Agreement.
Accounting services are provided to the Portfolio by FAM at cost.
Certain officers and/or trustees of the Trust are officers and/or
directors of Mercury Asset Management Funds, Inc., Mercury International,
FAM, PSI, and/or ML & Co.
3 Investments:
Purchases and sales of investments, excluding short-term securities, for
the period October 30, 1998 to May 31, 1999 were $378,850,865 and
$61,569,829, respectively.
May 31, 1999 35 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONCLUDED)
Net realized gains (losses) for the period October 30, 1998 to May 31,
1999 and net unrealized gains (losses) as of May 31, 1999 were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
--------------------------------------------------------------------------
Long-term investments $ 1,699,470 $ 6,324,865
Foreign currency transactions (380,682) (82,153)
----------------------------
Total $ 1,318,788 $ 6,242,712
============================
--------------------------------------------------------------------------
As of May 31, 1999, net unrealized appreciation for Federal income tax
purposes aggregated $5,659,341, of which $22,032,403 related to
appreciated securities and $16,373,062 related to depreciated securities.
At May 31, 1999, the aggregate cost of investments for Federal income tax
purposes was $319,646,030.
4 Commitments:
At May 31, 1999, the Portfolio had entered into foreign exchange contracts
under which it had agreed to purchase and sell various foreign currencies
with approximate values of $473,000 and $1,876,000, respectively.
May 31, 1999 36 Mercury International Fund
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
Mercury Master International Portfolio
(One of the Series constituting Mercury Asset Management Master Trust):
We have audited the accompanying statement of assets and liabilities of Mercury
Master International Portfolio, including the schedule of investments, as of May
31, 1999, the related statements of operations and changes in net assets, and
the financial highlights for the period from October 30, 1998 (commencement of
operations) to May 31, 1999. These financial statements and financial highlights
are the responsibility of the Portfolio's management. Our responsibility is to
express an opinion on these financial statements and financial highlights based
on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned at May 31, 1999 by
correspondence with the custodian and brokers; where replies were not received
from brokers, we performed other auditing procedures. 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 statements and financial highlights present
fairly, in all material respects, the financial position of Mercury Master
International Portfolio as of May 31, 1999, the results of its operations, the
changes in its net assets, and the financial highlights for the period from
October 30, 1998 (commencement of operations) to May 31, 1999 in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
July 19, 1999
May 31, 1999 37 Mercury International Fund
<PAGE>
PORTFOLIO INFORMATION (UNAUDITED)
WORLDWIDE INVESTMENTS AS OF MAY 31, 1999
================================================================================
Ten Largest Percent of
Equity Holdings Net Assets
================================================================================
Nokia Oyj 2.2%
- --------------------------------------------------------------------------------
Glaxo Wellcome PLC 1.9
- --------------------------------------------------------------------------------
BP Amoco PLC 1.8
- --------------------------------------------------------------------------------
Vodafone Group PLC 1.8
- --------------------------------------------------------------------------------
Mannesmann AG 1.8
- --------------------------------------------------------------------------------
Vivendi 1.7
- --------------------------------------------------------------------------------
Siemens AG 1.7
- --------------------------------------------------------------------------------
Lloyds TSB Group PLC 1.5
- --------------------------------------------------------------------------------
Unilever NV 'A' 1.5
- --------------------------------------------------------------------------------
Total SA 'B' 1.5
- --------------------------------------------------------------------------------
Percent of
Ten Largest Industries Net Assets
================================================================================
Telecommunications 12.4%
- --------------------------------------------------------------------------------
Banking 12.2
- --------------------------------------------------------------------------------
Electrical & Electronics 8.6
- --------------------------------------------------------------------------------
Health & Personal Care 7.0
- --------------------------------------------------------------------------------
Insurance 6.1
- --------------------------------------------------------------------------------
Energy Sources 5.9
- --------------------------------------------------------------------------------
Business/Public Services 4.4
- --------------------------------------------------------------------------------
Merchandising 4.2
- --------------------------------------------------------------------------------
Utilities--Electric & Gas 3.8
- --------------------------------------------------------------------------------
Food & Household Products 3.7
- --------------------------------------------------------------------------------
Percent of
Ten Largest Countries Net Assets
================================================================================
United Kingdom 21.8%
- --------------------------------------------------------------------------------
Japan 17.5
- --------------------------------------------------------------------------------
France 9.6
- --------------------------------------------------------------------------------
Netherlands 8.2
- --------------------------------------------------------------------------------
Germany 7.6
- --------------------------------------------------------------------------------
Switzerland 6.6
- --------------------------------------------------------------------------------
Italy 4.4
- --------------------------------------------------------------------------------
Australia 3.2
- --------------------------------------------------------------------------------
Sweden 2.9
- --------------------------------------------------------------------------------
Hong Kong 2.5
- --------------------------------------------------------------------------------
May 31, 1999 38 Mercury International Fund
<PAGE>
PORTFOLIO INFORMATION (UNAUDITED)
(CONCLUDED)
PORTFOLIO CHANGES FOR THE QUARTER ENDED MAY 31, 1999
================================================================================
Additions
- --------------------------------------------------------------------------------
Advanced Info Service Public Company Limited 'Foreign'
- --------------------------------------------------------------------------------
Anglo American PLC
- --------------------------------------------------------------------------------
Brambles Industries Limited
- --------------------------------------------------------------------------------
Cathay Pacific Airways
- --------------------------------------------------------------------------------
China Steel Corp. (GDR)
- --------------------------------------------------------------------------------
Coles Myer Limited
- --------------------------------------------------------------------------------
Compagnie Financiere de Paribas (CFP)
- --------------------------------------------------------------------------------
Companhia Cervejaria Brahma SA PN (Preferred) (ADR)
- --------------------------------------------------------------------------------
Companhia Paranaense de Energia SA (Copel) (ADR)
- --------------------------------------------------------------------------------
Fomento Economico Mexicano, SA de CV (ADR)
- --------------------------------------------------------------------------------
Grupo Televisa, SA de CV (GDR)
- --------------------------------------------------------------------------------
JUSCO Co., Ltd.
- --------------------------------------------------------------------------------
Kingfisher PLC
- --------------------------------------------------------------------------------
Kookmin Bank (GDR)
- --------------------------------------------------------------------------------
Korea Electric Power Corporation (ADR)
- --------------------------------------------------------------------------------
Korea Telecom Corporation (ADR)
- --------------------------------------------------------------------------------
Mitsui Chemicals Inc.
- --------------------------------------------------------------------------------
Mitsui Mining & Smelting Co., Ltd.
- --------------------------------------------------------------------------------
Murata Manufacturing Co., Ltd.
- --------------------------------------------------------------------------------
Pohang Iron & Steel Company, Ltd. (ADR)
- --------------------------------------------------------------------------------
Safra Republic Holdings, SA
- --------------------------------------------------------------------------------
Samsung Electronics (GDR)
- --------------------------------------------------------------------------------
Seat Pagine Gialle SpA
- --------------------------------------------------------------------------------
Siliconware Precision Industries Company (GDR)
- --------------------------------------------------------------------------------
Sumitomo Heavy Industries, Ltd.
- --------------------------------------------------------------------------------
Taiwan Semiconductor Manufacturing Company Ltd. (ADR)
- --------------------------------------------------------------------------------
Additions (concluded)
================================================================================
Tecnost SpA
- --------------------------------------------------------------------------------
Tele Centro Sul Participacoes SA (ADR)
- --------------------------------------------------------------------------------
Telefonica, SA (New Shares)
- --------------------------------------------------------------------------------
Telefonos de Mexico, SA de CV (ADR)
- --------------------------------------------------------------------------------
Telesp Celular Participacoes SA (ADR)
- --------------------------------------------------------------------------------
Telesp Participacoes SA (ADR)
- --------------------------------------------------------------------------------
Thai Farmers Bank Public Company Limited 'Foreign'
- --------------------------------------------------------------------------------
Toyota Motor Corporation
- --------------------------------------------------------------------------------
Uniao de Bancos Brasileiros SA (Unibanco) (GDR)
- --------------------------------------------------------------------------------
Winbond Electronics Corporation (GDR)
- --------------------------------------------------------------------------------
World Co., Ltd.
- --------------------------------------------------------------------------------
Deletions
================================================================================
Aoyamma Trading Co., Ltd.
- --------------------------------------------------------------------------------
Australian Gas Light Company Limited
- --------------------------------------------------------------------------------
Bridgestone Corporation
- --------------------------------------------------------------------------------
Endesa, SA
- --------------------------------------------------------------------------------
Nichii Gakkan Company
- --------------------------------------------------------------------------------
Panafon Hellenic Telecom Co.
- --------------------------------------------------------------------------------
Pharmacia & Upjohn, Inc. (Depositary Shares)
- --------------------------------------------------------------------------------
Rohm Company Ltd.
- --------------------------------------------------------------------------------
Sanofi SA
- --------------------------------------------------------------------------------
Scottish and Southern Energy PLC
- --------------------------------------------------------------------------------
Telecom Corporation of New Zealand Limited
- --------------------------------------------------------------------------------
Wacoal Corp.
- --------------------------------------------------------------------------------
Woolworths Limited
- --------------------------------------------------------------------------------
Yamanouchi Pharmaceutical Co., Ltd.
- --------------------------------------------------------------------------------
May 31, 1999 39 Mercury International Fund
<PAGE>
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
The Fund seeks long-term capital growth through investments primarily in a
diversified portfolio of equity securities of companies located outside the
United States. The Fund will seek to achieve its objective by investing all of
its assets in Mercury Master International Portfolio of Mercury Asset Management
Master Trust, which has the same investment objective as the Fund. The Fund's
investment experience will correspond to the investment experience of the
Portfolio.
Mercury International Fund of
Mercury Asset Management Funds, Inc.
Box 9011
Princeton, NJ
08543-9011
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