QUARTERLY REPORT
FEBRUARY 28, 1999
[GRAPHIC OMITTED]
Mercury
Pan-European
Growth
Fund OF MERCURY ASSET
MANAGEMENT FUNDS, INC.
----------------
MERCURY
ASSET MANAGEMENT
----------------
<PAGE>
MERCURY MASTER
PAN-EUROPEAN GROWTH PORTFOLIO
INDUSTRY WEIGHTINGS RELATIVE TO THE MSCI EUROPE INDEX
================================================================================
<TABLE>
<CAPTION>
Portfolio Allocation Index Allocation Portfolio Versus Index
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CAPITAL EQUIPMENT
Aerospace & Military Technology 0.0 0.5 -0.5
Construction & Housing 1.4 0.6 +0.8
Data Processing & Reproduction 0.0 0.1 -0.1
Electrical & Electronics 5.5 4.8 +0.7
Electronic Components & Instruments 0.0 0.5 -0.5
Energy Equipment & Services 0.0 0.1 -0.1
Industrial Components 0.0 0.7 -0.7
Machinery & Engineering 1.3 1.0 +0.3
- -----------------------------------------------------------------------------------------------------------
Total Capital Equipment 8.2 8.3 -0.1
- -----------------------------------------------------------------------------------------------------------
CONSUMER GOODS
Appliances & Household Durables 1.0 0.7 +0.4
Automobiles 1.3 2.8 -1.5
Beverages & Tobacco 2.3 2.0 +0.3
Food & Household Products 5.2 3.8 +1.5
Health & Personal Care 9.6 11.7 -2.1
Recreation & Other Consumer Goods 0.7 0.7 0.0
Textiles & Apparel 0.0 0.1 -0.1
- -----------------------------------------------------------------------------------------------------------
Total Consumer Goods 20.1 21.7 -1.6
- -----------------------------------------------------------------------------------------------------------
ENERGY
Energy Sources 6.1 7.0 -0.9
Utilities--Electric & Gas 3.0 4.9 -1.9
- -----------------------------------------------------------------------------------------------------------
Total Energy 9.1 11.9 -2.8
- -----------------------------------------------------------------------------------------------------------
FINANCE
Banking 12.6 14.7 -2.1
Financial Services 0.3 1.3 -1.0
Insurance 7.5 9.3 -1.8
Real Estate 0.0 0.6 -0.6
- -----------------------------------------------------------------------------------------------------------
Total Finance 20.4 25.9 -5.5
- -----------------------------------------------------------------------------------------------------------
GOLD MINES
Gold Mines 0.0 0.0+ 0.0
- -----------------------------------------------------------------------------------------------------------
Total Gold Mines 0.0 0.0+ 0.0
- -----------------------------------------------------------------------------------------------------------
MATERIALS
Building Materials & Components 0.0 1.5 -1.5
Chemicals 3.0 1.8 +1.2
Forest Products & Paper 0.0 0.4 -0.4
Metals/Non Ferrous 0.6 0.4 +0.2
Metals/Steel 0.0 0.4 -0.4
Miscellaneous Materials & Commodities 0.0 0.2 -0.2
- -----------------------------------------------------------------------------------------------------------
Total Materials 3.6 4.6 -1.0
- -----------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY
Multi-Industry 0.0 0.9 -0.9
- -----------------------------------------------------------------------------------------------------------
Total Multi-Industry 0.0 0.9 -0.9
- -----------------------------------------------------------------------------------------------------------
SERVICES
Broadcasting & Publishing 4.7 1.7 +3.0
Business/Public Services 6.7 5.4 +1.3
Leisure/Tourism 2.1 1.3 +0.8
Merchandising 8.5 4.8 +3.8
Telecommunications 11.3 12.6 -1.3
Transportation--Airlines 0.0 0.6 -0.6
Transportation--Road & Rail 0.0 0.1 -0.1
Transportation--Shipping 0.0 0.5 -0.5
Wholesale & International Trade 0.0 0.1 -0.1
- -----------------------------------------------------------------------------------------------------------
Total Services 33.3 26.9 +6.4
- -----------------------------------------------------------------------------------------------------------
</TABLE>
+ Amount is less than 0.1%.
February 28, 1999 1 Mercury Pan-European Growth Fund
<PAGE>
DEAR SHAREHOLDER
Investment Environment
The rally in European equity markets, which began last October, followed through
into 1999. After a buoyant start to the year and the successful introduction of
the euro, the Brazilian crisis led to profit taking. Since that time, we have
witnessed volatility in the markets. For the three-month period ended February
28, 1999, European markets were up around 5% (in local currency terms) with most
of the gains achieved in December.
European economic performance continued to be driven largely by the consumer.
Confidence, as shown by the European Community economic sentiment indicator,
continued to show a modest improvement in January. However, both Germany and the
United Kingdom continued to lag as industrial production in both countries was
below expectations and unemployment in Germany moved up to 11.5% by the end of
December. This led to calls by Germany's finance minister for the European
Central Bank to cut interest rates in order to head off concerns about
deflation. Investor perception that European interest rates might be cut,
together with economic strength in the United States, was the primary cause for
the euro's weakness. At the beginning of the year, the euro started trading at
1.18 to the US dollar. After briefly rising, the euro has fallen steadily to a
February month-end rate of around 1.10. This depreciation negatively affected
returns for US dollar-based investors. The European central bank maintained its
stance and, in spite of a benign outlook for inflation, had not cut interest
rates by the end of February.
The best-performing markets over the February quarter in local currency terms
were Finland and Ireland, up 23% and 12%, respectively, as measured by the
unmanaged Morgan Stanley Capital International Europe Index. Both of these
markets were driven by the strong performances of individual stocks, Nokia Oyj
and Allied Irish Banks PLC (both of which are Portfolio holdings). Most of the
other markets achieved near-index performance with the exceptions of
Switzerland, Norway and Germany. Germany was the weakest market and finished the
three-month period just in positive territory, held back by the prospect of tax
changes in Germany and concern that utilities would be forced to shut their
nuclear generators. Following the Green Party's defeat in the Hesse state
election, it seemed likely that restrictions on nuclear generation would be
reviewed, but the government has persevered with plans to tax some previously
exempt corporate provisions.
In sector terms, services outperformed dramatically, up 17% in local currency
terms. Within this sector, two industries--broadcasting and publishing and
leisure/tourism--both saw strong performances. In addition, the
telecommunication industry was very strong, up 29%, with Deutsche Telekom AG (a
Portfolio holding) the best-performing stock. Finance underperformed as concern
about global banks' exposure to emerging markets offset the positive impact of
corporate activity on some of the medium-sized and smaller banks. Chemicals also
underperformed, driven down by the weak level of global demand for commodity
goods.
Corporate activity recovered strongly from the lower levels seen in the third
quarter of 1998. During the first nine months of 1998, total intra-European
transactions amounted to $67 billion. In the fourth quarter of 1998 alone,
transactions worth nearly double this figure were announced. Corporate activity
has continued to drive stock markets for the
February 28, 1999 2 Mercury Pan-European Growth Fund
<PAGE>
first two months of 1999. During the February quarter, the largest transactions
were in telecommunications, energy sources and banking. In telecommunications,
Vodafone Group PLC (a Portfolio holding) bought AirTouch Communications, Inc.,
and Olivetti SpA bid for Telecom Italia SpA (another Portfolio holding). The
merger of British Petroleum Company PLC (also a Portfolio holding) and Amoco
Corporation was announced just before the year-end. In banking, Banco Santander,
SA (a Portfolio holding) announced a merger with Banco Central Hispano SA and
Societe Generale and Paribas SA announced that they would merge. Other
transactions announced included the sale of Volvo AB's car division to Ford
Motor Company and the merger of Viag AG with Alusuisse Lonza Group AG.
Portfolio Activities
We invested cash into the markets steadily during the February quarter. By the
end of February, liquidity stood at just over 5%.
The table on page 1 shows the Portfolio's sector allocation relative to the MSCI
Europe Index. Our current sector strategy continues to reinforce our defensive
view (in light of a slow down in world economic growth) and focuses on growth
sectors with a domestic European orientation. Therefore, we were underweight in
the materials, capital equipment and automobile sectors. The Portfolio was
overweighted in services, particularly the media, business services and retail
industries, with an emphasis on companies exposed to growth in European
economies. Our overweight position in mobile telephony reflects the continued
growth in mobile phone usage as we anticipate this sector's increasing
importance to Eurozone investors. The Portfolio benefited from its overweighting
in the services sector. Among the Portfolio's best-performing stocks were
Deutsche Telekom AG, Mannesmann AG, Swisscom AG, Vivendi and Adecco SA. During
the quarter, a few Portfolio holdings underperformed. These included Elf
Aquitaine SA and Total SA in the oil sector and Deutsche Bank AG,
HypoVereinsbank and Commerzbank AG in banking.
Investment Outlook
Corporate activity is expected to continue to support the market over the next 3
months-6 months, although it may slow up later in the year as managements become
disinclined to acquire any company that they suspect may turn out subsequently
to have a problem with the year 2000 issue. Economic activity is expected to
slow this year to about 1.5%-2.0%, but earnings per share are expected to grow
at around 8%. There is also the likelihood that there will be scope for further
interest rate cuts in Europe. Against this background, we remain optimistic
about the prospects for the rest of the year.
February 28, 1999 3 Mercury Pan-European Growth Fund
<PAGE>
In Conclusion
We thank you for your investment in Mercury Pan-European Growth Fund, and we
look forward to serving your investment needs in the months and years ahead.
Sincerely,
/s/ Jeffrey Peek /s/ Andreas E.F. Utermann
Jeffrey Peek Andreas E.F. Utermann
President Portfolio Manager
March 29, 1999
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" table 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.
February 28, 1999 4 Mercury Pan-European Growth Fund
<PAGE>
FUND PERFORMANCE DATA (CONCLUDED)
AVERAGE ANNUAL TOTAL RETURN
================================================================================
% Return % Return
Without Sales With Sales
Class I Shares* Charge Charge**
- --------------------------------------------------------------------------------
Inception (10/30/98)
through 12/31/98 +7.50% +1.86%
- --------------------------------------------------------------------------------
* 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 12/31/98 +7.40% +1.76%
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without With
Class B Shares* CDSC CDSC**
- --------------------------------------------------------------------------------
Inception (10/30/98)
through 12/31/98 +7.30% +3.30%
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
1 year.
** Assuming payment of applicable contingent deferred sales charge.
% Return % Return
Without With
Class C Shares* CDSC CDSC**
- --------------------------------------------------------------------------------
Inception (10/30/98)
through 12/31/98 +7.30% +6.30%
- --------------------------------------------------------------------------------
* 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 +1.37% +3.90%
- --------------------------------------------------------------------------------
Class A +1.37 +3.80
- --------------------------------------------------------------------------------
Class B +1.17 +3.60
- --------------------------------------------------------------------------------
Class C +1.17 +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 net asset values for the period shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the ex-dividend date. The Fund commenced operations on 10/30/98.
February 28, 1999 5 Mercury Pan-European Growth Fund
<PAGE>
SCHEDULE OF INVESTMENTS
MERCURY MASTER PAN-EUROPEAN GROWTH PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
In US Dollars
-----------------------------------------------
Percent of
Shares Held Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Appliances & Household Durables
Sweden 300,000 Electrolux AB 'B' $ 4,770,437 $ 5,684,865 1.0%
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Appliances &
Household Durables 4,770,437 5,684,865 1.0
- ------------------------------------------------------------------------------------------------------------------
Automobiles
Germany 45,000 DaimlerChrysler AG 3,584,242 4,206,112 0.8
47,000 Volkswagen AG 3,588,299 3,038,763 0.5
- ------------------------------------------------------------------------------------------------------------------
Total Investments
in Automobiles 7,172,541 7,244,875 1.3
- ------------------------------------------------------------------------------------------------------------------
Banking
Austria 80,000 Bank Austria AG 3,967,686 4,302,984 0.7
- ------------------------------------------------------------------------------------------------------------------
France 40,000 Credit Commercial de France 2,926,782 3,446,778 0.6
25,000 Societe Generale 'A' 4,049,892 3,669,062 0.6
-----------------------------------------------
6,976,674 7,115,840 1.2
- ------------------------------------------------------------------------------------------------------------------
Germany 110,000 Commerzbank AG 3,575,934 3,091,123 0.6
80,000 Deutsche Bank AG 5,064,719 4,175,651 0.7
70,002 HypoVereinsbank 5,467,021 3,965,006 0.7
-----------------------------------------------
14,107,674 11,231,780 2.0
- ------------------------------------------------------------------------------------------------------------------
Ireland 250,000 Allied Irish Banks PLC 4,681,750 4,335,915 0.8
- ------------------------------------------------------------------------------------------------------------------
Italy 1,100,000 Banca Intesa SpA 5,876,999 6,073,574 1.0
976,000 Unicredito Italiano SpA 5,165,639 5,131,791 0.9
-----------------------------------------------
11,042,638 11,205,365 1.9
- ------------------------------------------------------------------------------------------------------------------
Spain 350,000 Banco Santander, SA 6,744,590 6,953,930 1.2
- ------------------------------------------------------------------------------------------------------------------
Switzerland 89,438 Safra Republic Holdings
SA (ADR) (a) 4,359,026 3,890,553 0.7
30,000 UBS AG 9,090,515 9,338,763 1.6
-----------------------------------------------
13,449,541 13,229,316 2.3
- ------------------------------------------------------------------------------------------------------------------
United 170,000 Barclays PLC 3,680,708 4,536,618 0.8
Kingdom 70,084 HSBC Holdings PLC 1,675,549 2,043,142 0.4
540,000 Lloyds TSB Group PLC 6,890,466 7,737,175 1.3
-----------------------------------------------
12,246,723 14,316,935 2.5
- ------------------------------------------------------------------------------------------------------------------
Total Investments in Banking 73,217,276 72,692,065 12.6
- ------------------------------------------------------------------------------------------------------------------
Beverages & Tobacco
France 16,695 LVMH (Louis Vuitton
Moet Hennessy) 3,099,815 3,555,264 0.6
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
February 28, 1999 6 Mercury Pan-European Growth Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
-----------------------------------------------
Percent of
Shares Held Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Beverages & Tobacco (concluded)
United 400,000 British American
Kingdom Tobacco PLC $ 3,479,477 $ 3,648,900 0.7%
530,000 Diageo PLC 5,685,264 5,853,538 1.0
-----------------------------------------------
9,164,741 9,502,438 1.7
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Beverages & Tobacco 12,264,556 13,057,702 2.3
- ------------------------------------------------------------------------------------------------------------------
Broadcasting & Publishing
Belgium 80,000 Compagnie Luxembourgeoise
pour l'Audio-Visuel et
la Finance (Audiofina) 3,489,891 3,249,192 0.6
- ------------------------------------------------------------------------------------------------------------------
Luxembourg 15,000 Societe Europeenne
des Satellites 2,284,158 1,942,929 0.3
- ------------------------------------------------------------------------------------------------------------------
Netherlands 33,000 Wolters Kluwer NV `A' 6,330,397 6,357,330 1.1
- ------------------------------------------------------------------------------------------------------------------
United 300,000 Pearson PLC 5,362,123 6,593,009 1.1
Kingdom 950,000 Reed International PLC 7,662,052 9,141,673 1.6
-----------------------------------------------
13,024,175 15,734,682 2.7
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Broadcasting & Publishing 25,128,621 27,284,133 4.7
- ------------------------------------------------------------------------------------------------------------------
Business/Public Services
Austria 100,000 Flughafen Wien AG 4,735,966 4,281,030 0.8
- ------------------------------------------------------------------------------------------------------------------
France 58,000 Vivendi 12,947,160 15,120,817 2.6
- ------------------------------------------------------------------------------------------------------------------
Germany 5,500 SAP AG (Systeme,
Anwendungen, Produkte in
der Datenverarbeitung) 2,317,265 1,871,579 0.3
- ------------------------------------------------------------------------------------------------------------------
Spain 215,890 Autopistas, Concesionari
Espanola SA 3,257,998 3,061,813 0.5
- ------------------------------------------------------------------------------------------------------------------
Switzerland 4,759 Adecco SA 1,987,774 2,496,438 0.5
- ------------------------------------------------------------------------------------------------------------------
United 520,000 Compass Group PLC 5,235,226 6,426,101 1.1
Kingdom 550,000 Hays PLC 4,273,969 5,241,890 0.9
-----------------------------------------------
9,509,195 11,667,991 2.0
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Business/Public Services 34,755,358 38,499,668 6.7
- ------------------------------------------------------------------------------------------------------------------
Chemicals
Germany 300,000 Bayer AG 12,289,712 10,620,248 1.8
45,000 Henkel KGaA 3,630,986 3,373,781 0.6
-----------------------------------------------
15,920,698 13,994,029 2.4
- ------------------------------------------------------------------------------------------------------------------
Netherlands 85,000 Akzo Nobel NV 3,237,896 3,223,670 0.6
- ------------------------------------------------------------------------------------------------------------------
Total Investments
in Chemicals 19,158,594 17,217,699 3.0
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
February 28, 1999 7 Mercury Pan-European Growth Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
-----------------------------------------------
Shares Held/ Percent of
Face Amount Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Construction & Housing
France 58,882 Societe Generale
d'Entreprises SA $ 2,721,290 $ 2,539,500 0.4%
- ------------------------------------------------------------------------------------------------------------------
Germany 38,200 Heidelberger Zement AG 2,799,956 2,599,793 0.5
90,000 Hochtief AG 3,380,106 2,973,669 0.5
-----------------------------------------------
6,180,062 5,573,462 1.0
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Construction & Housing 8,901,352 8,112,962 1.4
- ------------------------------------------------------------------------------------------------------------------
Electrical & Electronics
Finland 50,000 Nokia Oyj 'A' 5,646,669 6,813,973 1.2
- ------------------------------------------------------------------------------------------------------------------
Germany 175,000 Siemens AG 10,798,620 11,045,606 1.9
- ------------------------------------------------------------------------------------------------------------------
Netherlands 70,000 Koninklijke (Royal) Philips
Electronics NV 4,208,778 4,879,277 0.8
- ------------------------------------------------------------------------------------------------------------------
Sweden 343,400 Telefonaktiebolaget LM
Ericsson 'B' 8,026,393 9,080,892 1.6
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Electrical & Electronics 28,680,460 31,819,748 5.5
- ------------------------------------------------------------------------------------------------------------------
Energy Sources
France 31,000 Elf Aquitaine SA 3,654,740 3,232,727 0.5
70,000 Total SA 'B' 8,155,457 7,299,705 1.3
-----------------------------------------------
11,810,197 10,532,432 1.8
- ------------------------------------------------------------------------------------------------------------------
Italy 900,000 ENI SpA 5,453,531 5,186,633 0.9
- ------------------------------------------------------------------------------------------------------------------
United 802,996 BP Amoco PLC 11,925,812 11,434,670 2.0
Kingdom 1,400,000 Shell Transport &
Trading Co., PLC 8,569,520 7,815,182 1.4
-----------------------------------------------
20,495,332 19,249,852 3.4
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Energy Sources 37,759,060 34,968,917 6.1
- ------------------------------------------------------------------------------------------------------------------
Financial Services
Ger- US$1,500,000 Deutsche Bank Finance NV,
many 2% due 12/22/2003 1,762,800 1,728,877 0.3
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Financial Services 1,762,800 1,728,877 0.3
- ------------------------------------------------------------------------------------------------------------------
Food & Household Products
Netherlands 200,000 Koninklijke Numico NV 8,600,504 9,330,450 1.6
- ------------------------------------------------------------------------------------------------------------------
Switzerland 22 Lindt & Sprungli AG 'R' 562,147 562,224 0.1
3,200 Nestle SA
(Registered Shares) 6,873,071 6,040,861 1.1
-----------------------------------------------
7,435,218 6,603,085 1.2
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
February 28, 1999 8 Mercury Pan-European Growth Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
-----------------------------------------------
Percent of
Shares Held Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Food & Household Products (concluded)
United 350,000 Cadbury Schweppes PLC $ 5,355,273 $ 5,365,229 0.9%
Kingdom 270,000 PizzaExpress PLC 3,432,243 3,143,092 0.5
600,000 Unilever PLC 6,127,325 5,766,480 1.0
-----------------------------------------------
14,914,841 14,274,801 2.4
- ------------------------------------------------------------------------------------------------------------------
Total Investments in Food &
Household Products 30,950,563 30,208,336 5.2
- ------------------------------------------------------------------------------------------------------------------
Health & Personal Care
Sweden 32,400 Pharmacia & Upjohn, Inc.
(Depositary Shares) 1,780,175 1,707,653 0.3
- ------------------------------------------------------------------------------------------------------------------
Switzerland 9,000 Novartis (Registered Shares) 17,089,440 15,790,999 2.7
900 Roche Holding AG 10,647,753 11,399,089 2.0
-----------------------------------------------
27,737,193 27,190,088 4.7
- ------------------------------------------------------------------------------------------------------------------
United 420,000 Glaxo Wellcome PLC 13,017,002 13,394,572 2.3
Kingdom 510,000 SmithKline Beecham PLC 6,361,832 7,180,709 1.3
145,000 Zeneca Group PLC 5,980,449 6,029,496 1.0
-----------------------------------------------
25,359,283 26,604,777 4.6
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Health & Personal Care 54,876,651 55,502,518 9.6
- ------------------------------------------------------------------------------------------------------------------
Insurance
Belgium 230,000 Fortis AG `B' 8,295,287 8,369,414 1.5
- ------------------------------------------------------------------------------------------------------------------
France 50,000 Axa 6,209,177 6,520,338 1.1
- ------------------------------------------------------------------------------------------------------------------
Germany 24,000 Allianz AG
(Registered Shares) 8,114,897 7,273,799 1.3
- ------------------------------------------------------------------------------------------------------------------
Italy 100,000 Assicurazioni Generali 3,796,243 3,863,904 0.7
- ------------------------------------------------------------------------------------------------------------------
Netherlands 164,990 ING Groep NV 9,027,448 9,236,586 1.6
- ------------------------------------------------------------------------------------------------------------------
United 170,000 Allied Zurich AG 2,149,709 2,509,300 0.4
Kingdom 640,000 Royal & Sun Alliance
Insurance Group PLC 5,612,086 5,407,677 0.9
-----------------------------------------------
7,761,795 7,916,977 1.3
- ------------------------------------------------------------------------------------------------------------------
Total Investments
in Insurance 43,204,847 43,181,018 7.5
- ------------------------------------------------------------------------------------------------------------------
Leisure/Tourism
France 38,000 Accor SA 7,923,375 8,843,071 1.6
- ------------------------------------------------------------------------------------------------------------------
United 1,150,000 Thomson Travel Group PLC 2,716,859 3,076,257 0.5
Kingdom
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Leisure/Tourism 10,640,234 11,919,328 2.1
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
February 28, 1999 9 Mercury Pan-European Growth Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
-----------------------------------------------
Percent of
Shares Held Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Machinery & Engineering
Austria 46,000 VA Technologie AG $ 3,734,690 $ 3,559,841 0.6%
- ------------------------------------------------------------------------------------------------------------------
Sweden 150,000 Atlas Copco AB 'A' 3,409,552 3,701,560 0.7
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Machinery & Engineering 7,144,242 7,261,401 1.3
- ------------------------------------------------------------------------------------------------------------------
Merchandising
Belgium 80,000 Delhaize "Le Lion" SA 6,717,165 7,692,682 1.3
- ------------------------------------------------------------------------------------------------------------------
France 7,000 Carrefour SA 5,005,180 4,986,851 0.9
35,000 Etablissements Economiques
du Casino
Guichard-Perrachon SA 3,556,203 3,215,712 0.5
32,000 Guilbert SA 4,363,943 4,162,478 0.7
61,632 Pinault-Printemps-
Redoute SA 10,624,120 10,222,436 1.8
-----------------------------------------------
23,549,446 22,587,477 3.9
- ------------------------------------------------------------------------------------------------------------------
Germany 22,000 Metro AG 1,429,343 1,555,221 0.3
80,000 Metro AG (Preferred) 3,214,778 3,038,434 0.5
-----------------------------------------------
4,644,121 4,593,655 0.8
- ------------------------------------------------------------------------------------------------------------------
Netherlands 160,000 Hagemeyer NV 5,275,628 4,935,259 0.9
- ------------------------------------------------------------------------------------------------------------------
United 850,000 Safeway PLC 4,176,982 3,652,304 0.6
Kingdom 2,000,000 Tesco PLC 5,478,764 5,670,372 1.0
-----------------------------------------------
9,655,746 9,322,676 1.6
- ------------------------------------------------------------------------------------------------------------------
Total Investments
in Merchandising 49,842,106 49,131,749 8.5
- ------------------------------------------------------------------------------------------------------------------
Metals/Non-Ferrous
United 290,000 Rio Tinto PLC
Kingdom (Registered Shares) 3,502,600 3,755,660 0.6
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Metals/Non-Ferrous 3,502,600 3,755,660 0.6
- ------------------------------------------------------------------------------------------------------------------
Recreation & Other Consumer Goods
United 520,000 EMI Group PLC 3,161,048 3,837,753 0.7
Kingdom
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Recreation & Other
Consumer Goods 3,161,048 3,837,753 0.7
- ------------------------------------------------------------------------------------------------------------------
Telecommunications
Germany 130,000 Deutsche Telekom AG 4,133,525 5,964,902 1.0
65,000 Mannesmann AG 7,178,718 8,726,166 1.5
-----------------------------------------------
11,312,243 14,691,068 2.5
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
February 28, 1999 10 Mercury Pan-European Growth Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONCLUDED)
<TABLE>
<CAPTION>
In US Dollars
-----------------------------------------------
Percent of
Shares Held Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Telecommunications (concluded)
Greece 130,000 Hellenic Telecommunication
Organization SA (OTE) $ 2,997,550 $ 3,426,425 0.6%
- ------------------------------------------------------------------------------------------------------------------
Italy 2,494,000 Telecom Italia Mobile
(TIM) SpA 10,160,783 10,074,603 1.8
1,077,322 Telecom Italia SpA 5,735,094 7,272,845 1.3
-----------------------------------------------
15,895,877 17,347,448 3.1
- ------------------------------------------------------------------------------------------------------------------
Spain 173,000 Telefonica SA 7,708,470 7,899,927 1.4
- ------------------------------------------------------------------------------------------------------------------
Switzerland 14,000 Swisscom AG
(Registered Shares) 4,848,218 5,536,996 1.0
- ------------------------------------------------------------------------------------------------------------------
United 280,000 British Telecommunications
Kingdom PLC 3,704,446 4,848,328 0.8
450,000 Cable & Wireless PLC 3,846,000 5,333,994 0.9
310,000 Vodafone Group PLC 5,112,438 5,685,589 1.0
-----------------------------------------------
12,662,884 15,867,911 2.7
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Telecommunications 55,425,242 64,769,775 11.3
- ------------------------------------------------------------------------------------------------------------------
Utilities--Electric & Gas
Belgium 15,000 Electrabel SA 5,600,840 6,256,890 1.1
- ------------------------------------------------------------------------------------------------------------------
Germany 100,000 VEBA AG 5,425,986 5,334,822 0.9
- ------------------------------------------------------------------------------------------------------------------
Spain 210,000 Endesa SA 5,593,093 5,564,680 1.0
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Utilities--Electric & Gas 16,619,919 17,156,392 3.0
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Face
Amount Short-Term Securities
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For- DM 50,000,000 German Bubillo Treasury Bill,
eign 3.27% due 4/16/1999 29,507,656 27,960,513 4.9
Government
Obligations*
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Short-Term Securities 29,507,656 27,960,513 4.9
- ------------------------------------------------------------------------------------------------------------------
Total Investments $558,446,163 572,995,954 99.6
============
Time Deposits** 2,136,000 0.4
Liabilities in Excess of Other Assets (11,346) 0.0
------------------------
Net Assets $575,120,608 100.0%
========================
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) American Depositary Receipt (ADR).
* Certain Foreign Government Obligations are traded on a discount basis; the
interest rate shown reflects the discount rate paid at the time of
purchase by the Fund.
** Time deposit bears interest at 4.812% and matures on 3/01/1999.
February 28, 1999 11 Mercury Pan-European Growth Fund
<PAGE>
PORTFOLIO INFORMATION
WORLDWIDE INVESTMENTS AS OF FEBRUARY 28, 1999
================================================================================
Ten Largest Percent of
Equity Holdings Net Assets
- --------------------------------------------------------------------------------
Novartis (Registered Shares) 2.7%
- --------------------------------------------------------------------------------
Vivendi 2.6
- --------------------------------------------------------------------------------
Glaxo Wellcome PLC 2.3
- --------------------------------------------------------------------------------
BP Amoco PLC 2.0
- --------------------------------------------------------------------------------
Roche Holding AG 2.0
- --------------------------------------------------------------------------------
Siemens AG 1.9
- --------------------------------------------------------------------------------
Bayer AG 1.8
- --------------------------------------------------------------------------------
Pinault-Printemps-Redoute SA 1.8
- --------------------------------------------------------------------------------
Telecom Italia Mobile (TIM) SpA 1.8
- --------------------------------------------------------------------------------
UBS AG 1.6
- --------------------------------------------------------------------------------
Ten Largest Percent of
Industries Net Assets
- --------------------------------------------------------------------------------
Banking 12.6%
- --------------------------------------------------------------------------------
Telecommunications 11.3
- --------------------------------------------------------------------------------
Health & Personal Care 9.6
- --------------------------------------------------------------------------------
Merchandising 8.5
- --------------------------------------------------------------------------------
Insurance 7.5
- --------------------------------------------------------------------------------
Business/Public Services 6.7
- --------------------------------------------------------------------------------
Energy Sources 6.1
- --------------------------------------------------------------------------------
Electrical & Electronics 5.5
- --------------------------------------------------------------------------------
Food & Household Products 5.2
- --------------------------------------------------------------------------------
Broadcasting & Publishing 4.7
- --------------------------------------------------------------------------------
GEOGRAPHIC ALLOCATION
================================================================================
As a Percentage of Net Assets as of February 28, 1999
[THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
United Kingdom 26.7%
Germany 14.7%
France 13.2%
Switzerland 9.7%
Netherlands 6.6%
Italy 6.6%
Cash Equivalent 5.3%
Belgium 4.5%
Spain 4.1%
Sweden 3.6%
Austria 2.1%
Other 1.7%*
Finland 1.2%
* Includes Greece, Ireland and Luxembourg.
February 28, 1999 12 Mercury Pan-European Growth Fund
<PAGE>
PORTFOLIO INFORMATION (CONCLUDED)
PORTFOLIO CHANGES FOR THE QUARTER ENDED FEBRUARY 28, 1999
================================================================================
Additions
- --------------------------------------------------------------------------------
Allied Irish Banks PLC
- --------------------------------------------------------------------------------
Autopistas, Concesionari Espanola SA
- --------------------------------------------------------------------------------
Bank Austria AG
- --------------------------------------------------------------------------------
Commerzbank AG
- --------------------------------------------------------------------------------
Compagnie Luxembourgeoise pour
l'Audio-Visuel et la Finance (Audiofina)
- --------------------------------------------------------------------------------
Delhaize "Le Lion" SA
- --------------------------------------------------------------------------------
Etablissements Economiques du Casino Guichard-Perrachon SA
- --------------------------------------------------------------------------------
* Fortis NV
- --------------------------------------------------------------------------------
Hellenic Telecommunication
Organization SA (OTE)
- --------------------------------------------------------------------------------
Henkel KGaA
- --------------------------------------------------------------------------------
Pharmacia & Upjohn, Inc. (Depositary Shares)
- --------------------------------------------------------------------------------
PizzaExpress PLC
- --------------------------------------------------------------------------------
Societe Europeenne des Satellites
- --------------------------------------------------------------------------------
Societe Generale `A'
- --------------------------------------------------------------------------------
Societe Generale d'Entreprises SA
- --------------------------------------------------------------------------------
Swisscom AG (Registered Shares)
- --------------------------------------------------------------------------------
Telecom Italia Mobile (TIM) SpA
- --------------------------------------------------------------------------------
* Telefonica SA (New)
- --------------------------------------------------------------------------------
Thomson Travel Group PLC
- --------------------------------------------------------------------------------
VA Technologie AG
- --------------------------------------------------------------------------------
Deletions
- --------------------------------------------------------------------------------
Brisa-Auto Estradas de Portugal, SA
- --------------------------------------------------------------------------------
* Fortis NV
- --------------------------------------------------------------------------------
Panfon Hellenic Telecom Co.
- --------------------------------------------------------------------------------
* Telefonica SA (New)
- --------------------------------------------------------------------------------
* Added and deleted in the same quarter.
February 28, 1999 13 Mercury Pan-European Growth 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
February 28, 1999 14 Mercury Pan-European Growth 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 in Europe. The
Fund will seek to achieve its objective by investing all of its assets in
Mercury Master Pan-European Growth 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 Pan-European Growth Fund of
Mercury Asset Management Funds, Inc.
Box 9011
Princeton, NJ
08543-9011
[LOGO] Printed on post-consumer recycled paper MERCPAN--2/99
