QUARTERLY REPORT
FEBRUARY 28, 1999
[GRAPHIC OMITTED]
Mercury
International
Fund
OF MERCURY ASSET
MANAGEMENT FUNDS, INC.
----------------
MERCURY
ASSET MANAGEMENT
----------------
<PAGE>
MERCURY MASTER INTERNATIONAL PORTFOLIO
SECTOR REPRESENTATION
- --------------------------------------------------------------------------------
As a Percentage of Net Assets as of February 28, 1999
A pie chart illustrating the following percentages (As a Percentage of Net
Assets as of February 28, 1999):
Materials 3.3%
Capital Equipment 11.0%
Energy 9.9%
Cash Equivalent 5.7%
Finance 20.6%
Services 26.5%
Consumer Goods 23.0%
GEOGRAPHIC ASSET MIX
- --------------------------------------------------------------------------------
As a Percentage of Net Assets as of February 28, 1999
A pie chart illustrating the following percentages (As a Percentage of Net
Assets as of February 28, 1999):
Japan 11.8%
Pacific Basin/Asia
(Ex Japan & Australia) 1.4%
Cash Equivalent 5.7%
Europe 78.4%
Australia 2.7%
February 28, 1999 (1) Mercury International Fund
<PAGE>
DEAR SHAREHOLDER
Investment Environment
During the three months ended February 28, 1999, European stock markets
continued to outperform their Asian counterparts. Since Mercury Master
International Portfolio overweighted European stocks relative to Asian equities,
this trend benefited performance. In local currency terms, European stock
markets rallied from the lows seen in the fall of last year. This rally
coincided with the successful launch of the euro and a phenomenal increase in
corporate activity. 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 amount were announced. Corporate activity
continued to drive stock markets for the first two months of 1999. The largest
transactions were in telecommunications and banking, with the announcements that
Vodafone Group PLC (a Portfolio holding) would buy AirTouch Communications, Inc.
and Olivetti SpA bid for Telecom Italia SpA (also a Portfolio holding). The
announcements that Banco Santander, SA (another Portfolio holding) would merge
with Banco Central Hispano SA and Societe Generale (a Portfolio holding) would
merge with Paribas SA fueled much further speculation in the financial sector.
European economic performance continues to be driven largely by the consumer.
However, there are signs of weakness in European economies, particularly in
Germany and the United Kingdom where industrial production has been below
expectations. Furthermore, unemployment in Germany is currently approaching 12%,
and has led to calls by the German finance minister for the European central
bank to cut interest rates in order to stimulate economic growth. Weak economic
growth and the perception that European interest rates are likely to fall have
led to weakness in the euro. This has been particularly noticeable relative to
the US dollar, which is benefiting from both strong economic growth and the
anticipation that the Federal Reserve Board may increase interest rates over the
next six months.
We have seen some encouraging developments in Japan such as the recent
restructuring announcement by Sony Corp. and the action by the Financial
Supervisory Authority. However, more aggressive action is needed to facilitate a
sustained return to economic growth in this country and the rest of Asia. The
Japanese stock market has made very little progress over the February quarter
(in US dollar terms) and has fallen by nearly 4% (in local currency terms). This
disappointing performance has set the tone for much of Asia with the noticeable
exception of Australia.
Portfolio Activities
Within European stock markets, Mercury Master International Portfolio continued
to add to holdings in sectors which are expected to display strong secular
long-term growth. This strategy reflects our concern regarding the
sustainability of aggregate corporate profit growth and the slowdown being
experienced by many European economies. For example, we established a position
in Telecom Italia Mobile (TIM) SpA, the Italian mobile telecommunications
operator. We believe that the company is undervalued
February 28, 1999 (2) Mercury International Fund
<PAGE>
relative to its peer group and should continue to participate in the surge in
mobile telecommunication use throughout Italy over the long term.
Over the quarter ended February 28, 1999, merger and acquisition activity
continued to be very strong throughout Europe. We believe that the merger
between Sanofi SA, the French pharmaceutical company and its nearest rival,
Synthelabo, will address some of the weaknesses of both companies and add
greater credibility to anticipated strong earnings growth going forward. As a
result, we purchased Sanofi SA during the quarter.
Following several negative profits and sales announcements, we became less
confident that Nestle SA would be able to increase earnings. Accordingly, we
reduced our position during the February quarter. The concern over loss of
market share and specific divisions' profitability were two reasons behind our
partial sale of Telefonaktiebolaget LM Ericsson. Following a strong performance
from Bayer AG, the German healthcare and chemicals group, we reduced our
position amidst concerns over the company's longer-term profitability.
During the February quarter, we added two major holdings in Japan. We initiated
a position in Minibea Co., Ltd., the world's number-one maker of miniature
bearings. We were particularly impressed by that company's efficient overseas
production capacity and an improved product mix with its expanding personal
computer components business. We also established a position in Alpine
Electronics, a car audio and car navigation manufacturer. The in-car navigation
market is particularly strong in Japan and growing at a very rapid pace. The
company is rapidly expanding its already high market share in this business.
Following the company's diversification into property development, we sold our
position in Nishimatsu Construction Co. Ltd. We also sold our position in JUSCO
Co., Ltd., the general retailer. Although JUSCO has a focused expansion
strategy, the company is suffering from a price war initiated by its
competitors.
Investment Outlook
We continue to remain positive regarding the outlook for European equity
markets. In particular, we anticipate that the boom in merger and acquisition
activity will continue. This fact, combined with our belief that demand for
European equities will be strong over the next few years, makes us positive
regarding the outlook for international equities.
The Portfolio remains overweight in European equities relative to its benchmark,
the unmanaged Morgan Stanley Capital International (Ex US) Index. We still
remain cautious regarding the near-term outlook for Japanese equities, although
some encouraging signs regarding structural reform give us encouragement over
the longer term. In the meantime, we remain underweight in Japanese equities. We
continue to believe that this is not the time to significantly increase
investments in the Pacific Basin/Asia, particularly because of the risk a weak
yen poses to the region. Whether a setback would represent
February 28, 1999 (3) Mercury International Fund
<PAGE>
a buying opportunity for us will depend on evidence of an improvement in
domestic fundamentals at that time.
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
March 30, 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.
February 28, 1999 (4) Mercury International Fund
<PAGE>
FUND PERFORMANCE DATA (CONCLUDED)
None of the past results shown should be considered a representation of future
performance. Figures shown in the "Recent Performance Results" and "Average
Annual Total Return" tables assume reinvestment of all dividends and capital
gains distributions at net asset value on the ex-dividend date. Investment
return and principal value of shares will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. Dividends paid to
each class of shares will vary because of the different levels of account
maintenance, distribution and transfer agency fees applicable to each class,
which are deducted from the income available to be paid to shareholders.
RECENT PERFORMANCE RESULTS*
================================================================================
3 Month Since Inception
Total Return Total Return
- --------------------------------------------------------------------------------
Class I +0.98% +3.20%
- --------------------------------------------------------------------------------
Class A +0.88 +3.10
- --------------------------------------------------------------------------------
Class B +0.69 +2.80
- --------------------------------------------------------------------------------
Class C +0.69 +2.80
- --------------------------------------------------------------------------------
* 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 commenced operations on 10/30/98.
AVERAGE ANNUAL TOTAL RETURN
================================================================================
% Return % Return
Without Sales With Sales
Class I Shares* Charge Charge**
- --------------------------------------------------------------------------------
Inception (10/30/98)
through 12/31/98 +5.60% +0.06%
- --------------------------------------------------------------------------------
* 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 +5.50% -0.04%
- --------------------------------------------------------------------------------
* 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 +5.40% +1.40%
- --------------------------------------------------------------------------------
* 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 12/31/98 +5.40% +4.40%
- --------------------------------------------------------------------------------
* Maximum contingent deferred sales charge is 1% and is reduced to 0% after
1 year.
** Assuming payment of applicable contingent deferred sales charge.
February 28, 1999 (5) Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------------
Shares Percent of
Industries Held Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
EUROPE
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Belgium
Insurance 102,196 Fortis AG 'B' $ 3,571,531 $ 3,718,785 1.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities-- 6,803 Electrabel SA 2,665,631 2,837,708 0.9
Electric & Gas
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Belgium 6,237,162 6,556,493 2.1
- ------------------------------------------------------------------------------------------------------------------------------------
Finland
Electrical & 52,222 Nokia Oyj 'A' 5,609,946 7,116,786 2.3
Electronics
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Finland 5,609,946 7,116,786 2.3
- ------------------------------------------------------------------------------------------------------------------------------------
France
Automobiles 33,857 Valeo SA 2,845,925 2,830,102 0.9
- ------------------------------------------------------------------------------------------------------------------------------------
Banking 14,741 Societe Generale 'A' 2,207,035 2,163,426 0.7
- ------------------------------------------------------------------------------------------------------------------------------------
Business/ 28,546 Vivendi 6,726,039 7,442,049 2.4
Public Services
- ------------------------------------------------------------------------------------------------------------------------------------
Energy Sources 9,505 Elf Aquitaine SA 1,135,679 991,196 0.3
40,788 Total SA 'B' 4,675,669 4,253,434 1.4
------------------------------------------------
5,811,348 5,244,630 1.7
- ------------------------------------------------------------------------------------------------------------------------------------
Health & 10,035 Sanofi SA 1,852,585 1,765,772 0.6
Personal Care
- ------------------------------------------------------------------------------------------------------------------------------------
Insurance 37,527 Axa 4,662,708 4,893,774 1.6
- ------------------------------------------------------------------------------------------------------------------------------------
Leisure/ 18,293 Accor SA 3,956,887 4,257,008 1.4
Tourism
- ------------------------------------------------------------------------------------------------------------------------------------
Merchandising 4,065 Guilbert SA 564,534 528,765 0.2
26,380 Pinault-Printemps-Redoute SA 4,602,474 4,375,452 1.4
------------------------------------------------
5,167,008 4,904,217 1.6
- ------------------------------------------------------------------------------------------------------------------------------------
Metals--Steel 57,535 Usinor SA 660,661 706,086 0.3
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in France 33,890,196 34,207,064 11.2
- ------------------------------------------------------------------------------------------------------------------------------------
Germany
Automobiles 22,641 DaimlerChrysler AG 2,006,593 2,116,235 0.7
- ------------------------------------------------------------------------------------------------------------------------------------
Banking 47,814 HypoVereinsbank 3,714,701 2,708,248 0.9
- ------------------------------------------------------------------------------------------------------------------------------------
Business/ 4,927 SAP AG (Systeme, Anwendun-
Public Services gen, Produkte in der Daten-
verarbeitung) (Preferred) 2,340,800 1,860,479 0.6
- ------------------------------------------------------------------------------------------------------------------------------------
Chemicals 49,714 Bayer AG 2,036,510 1,759,917 0.6
- ------------------------------------------------------------------------------------------------------------------------------------
Electrical & 68,530 Siemens AG 4,456,750 4,325,459 1.4
Electronics
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
February 28, 1999 (6) Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------------
Shares Percent of
Industries Held Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
EUROPE (continued)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Germany (concluded)
Insurance 13,373 Allianz AG (Registered Shares) $ 4,641,662 $ 4,053,022 1.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Telecommu- 44,393 Mannesmann AG 4,924,218 5,959,703 1.9
nications
- ------------------------------------------------------------------------------------------------------------------------------------
Transporta- 53,088 Deutsche Lufthansa AG
tion--Airlines (Registered Shares) 1,170,162 1,168,408 0.4
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities-- 39,807 VEBA AG 2,235,634 2,123,633 0.7
Electric & Gas
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Germany 27,527,030 26,075,104 8.5
- ------------------------------------------------------------------------------------------------------------------------------------
Greece
Telecommu- 18,810 Panafon Hellenic Telecom Co. 339,051 600,456 0.2
nications
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Greece 339,051 600,456 0.2
- ------------------------------------------------------------------------------------------------------------------------------------
Italy
Banking 760,154 Unicredito Italiano SpA 4,100,173 3,996,877 1.3
- ------------------------------------------------------------------------------------------------------------------------------------
Energy 433,124 ENI SpA 2,654,132 2,496,061 0.8
Sources
- ------------------------------------------------------------------------------------------------------------------------------------
Telecommu- 674,910 Telecom Italia Mobile (TIM) SpA 3,014,554 2,726,323 0.9
nications 1,163,629 Telecom Italia SpA 6,764,359 7,855,491 2.6
------------------------------------------------
9,778,913 10,581,814 3.5
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Italy 16,533,218 17,074,752 5.6
- ------------------------------------------------------------------------------------------------------------------------------------
Netherlands
Broadcasting 12,494 Wolters Kluwer NV 'A' 2,442,830 2,406,924 0.8
& Publishing
- ------------------------------------------------------------------------------------------------------------------------------------
Chemicals 65,369 Akzo Nobel NV 2,667,915 2,479,154 0.8
- ------------------------------------------------------------------------------------------------------------------------------------
Electrical & 53,212 Koninklijke (Royal) Philips
Electronics Electronics NV 3,382,615 3,709,087 1.2
- ------------------------------------------------------------------------------------------------------------------------------------
Energy Sources 89,166 Royal Dutch Petroleum Company 4,253,879 3,915,101 1.3
- ------------------------------------------------------------------------------------------------------------------------------------
Food & 88,446 Koninklijke Numico NV 3,768,918 4,126,205 1.4
Household 73,583 Unilever NV 'A' 5,787,752 5,306,724 1.7
Products ------------------------------------------------
9,556,670 9,432,929 3.1
- ------------------------------------------------------------------------------------------------------------------------------------
Insurance 88,608 ING Groep NV 4,837,734 4,960,515 1.6
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in the Netherlands 27,141,643 26,903,710 8.8
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
February 28, 1999 (7) Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------------
Shares Percent of
Industries Held Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
EUROPE (continued)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Spain
Banking 203,701 Banco Santander, SA $ 3,908,994 $ 4,047,207 1.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Telecommu- 96,699 Telefonica, SA 4,401,273 4,415,694 1.5
nications
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities-- 93,467 Endesa, SA 2,474,669 2,476,733 0.8
Electric & Gas
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Spain 10,784,936 10,939,634 3.6
- ------------------------------------------------------------------------------------------------------------------------------------
Sweden
Appliances 214,777 Electrolux AB 'B' 3,450,379 4,069,927 1.3
& Household
Durables
- ------------------------------------------------------------------------------------------------------------------------------------
Electrical & 99,091 ABB AB 'A' 1,069,380 1,123,015 0.4
Electronics 97,395 Telefonaktiebolaget
LM Ericsson 'B' 2,542,223 2,575,520 0.8
------------------------------------------------
3,611,603 3,698,535 1.2
- ------------------------------------------------------------------------------------------------------------------------------------
Health & 16,122 Pharmacia & Upjohn, Inc.
Personal Care (Depositary Shares) 885,747 849,715 0.3
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Sweden 7,947,729 8,618,177 2.8
- ------------------------------------------------------------------------------------------------------------------------------------
Switzerland
Banking 17,531 Credit Suisse Group
(Registered Shares) 2,787,790 2,722,581 0.9
10,072 UBS AG 2,964,749 3,135,334 1.0
------------------------------------------------
5,752,539 5,857,915 1.9
- ------------------------------------------------------------------------------------------------------------------------------------
Business/ 6,968 Adecco SA 2,980,515 3,655,218 1.2
Public Services
- ------------------------------------------------------------------------------------------------------------------------------------
Food & 2,170 Nestle SA (Registered Shares) 4,253,879 3,915,101 1.3
Household
Products
- ------------------------------------------------------------------------------------------------------------------------------------
Health & 3,342 Novartis (Registered Shares) 6,295,357 5,863,724 1.9
Personal Care 429 Roche Holding AG 5,188,093 5,433,566 1.8
------------------------------------------------
11,483,450 11,297,290 3.7
- ------------------------------------------------------------------------------------------------------------------------------------
Telecommu- 9,053 Swisscom AG (Registered Shares) 3,230,359 3,580,459 1.2
nications
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Switzerland 27,957,865 28,487,341 9.3
- ------------------------------------------------------------------------------------------------------------------------------------
United Kingdom
Aerospace 317,581 British Aerospace PLC 2,518,541 2,017,000 0.7
& Military
Technology
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
February 28, 1999 (8) Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------------
Shares Percent of
Industries Held Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
EUROPE (concluded)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
United Kingdom (concluded)
Banking 153,486 Barclays PLC $ 3,374,354 $ 4,095,926 1.3%
431,975 Lloyds TSB Group PLC 5,658,295 6,189,381 2.0
------------------------------------------------
9,032,649 10,285,307 3.3
- ------------------------------------------------------------------------------------------------------------------------------------
Beverages 269,194 British American Tobacco PLC 2,443,942 2,455,655 0.8
& Tobacco 273,384 Diageo PLC 2,982,077 3,019,365 1.0
------------------------------------------------
5,426,019 5,475,020 1.8
- ------------------------------------------------------------------------------------------------------------------------------------
Broadcasting 407,328 Reed International PLC 3,285,081 3,919,641 1.3
& Publishing
- ------------------------------------------------------------------------------------------------------------------------------------
Energy 282,192 BP Amoco PLC 4,226,204 4,018,415 1.3
Sources
- ------------------------------------------------------------------------------------------------------------------------------------
Health & 236,186 Glaxo Wellcome PLC 7,657,204 7,532,406 2.5
Personal 301,951 SmithKline Beecham PLC 3,965,674 4,251,416 1.4
Care 76,552 Zeneca Group PLC 3,131,517 3,183,241 1.0
------------------------------------------------
14,754,395 14,967,063 4.9
- ------------------------------------------------------------------------------------------------------------------------------------
Insurance 192,757 Allied Zurich AG 2,599,815 2,845,206 0.9
183,344 CGU PLC 2,839,172 2,700,391 0.9
------------------------------------------------
5,438,987 5,545,597 1.8
- ------------------------------------------------------------------------------------------------------------------------------------
Merchan- 83,548 Dixons Group PLC 1,445,924 1,574,477 0.5
dising 240,231 Marks & Spencer PLC 1,736,608 1,615,206 0.5
853,502 Tesco PLC 2,425,011 2,419,837 0.8
------------------------------------------------
5,607,543 5,609,520 1.8
- ------------------------------------------------------------------------------------------------------------------------------------
Recreation & 199,566 EMI Group PLC 1,202,676 1,472,856 0.5
Other Con-
sumer Goods
- ------------------------------------------------------------------------------------------------------------------------------------
Telecommu- 233,529 British Telecommunications PLC 3,557,002 4,043,662 1.3
nications 224,116 Cable & Wireless PLC 2,711,078 3,063,971 1.0
250,431 Vodafone Group PLC 3,734,864 4,593,057 1.5
------------------------------------------------
10,002,944 11,700,690 3.8
- ------------------------------------------------------------------------------------------------------------------------------------
Transpor- 232,091 The Peninsular and Oriental
tation-- Stream Navigation Company 2,579,679 2,726,884 0.9
Shipping
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities-- 384,091 BG PLC 2,542,201 2,260,996 0.7
Electric & 218,835 National Grid Group PLC 1,772,698 1,580,890 0.5
Gas 217,496 Scottish and Southern
Energy PLC 2,326,326 2,015,408 0.7
------------------------------------------------
6,641,225 5,857,294 1.9
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in the United Kingdom 70,715,943 73,595,287 24.0
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Europe 234,684,719 240,174,804 78.4
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
February 28, 1999 (9) Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------------
Shares Percent of
Industries Held Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
PACIFIC BASIN/ASIA
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Australia
Banking 234,000 Colonial Limited $ 818,561 $ 884,247 0.3%
99,000 Commonwealth Bank of Australia 1,400,522 1,486,833 0.5
------------------------------------------------
2,219,083 2,371,080 0.8
- ------------------------------------------------------------------------------------------------------------------------------------
Beverages & 564,000 Foster's Brewing Group Limited 1,497,280 1,617,085 0.5
Tobacco
- ------------------------------------------------------------------------------------------------------------------------------------
Electrical & 488,000 Telstra Corporation Limited 2,225,474 2,488,239 0.8
Electronics
- ------------------------------------------------------------------------------------------------------------------------------------
Merchan- 90,000 Woolworths Limited 321,365 293,457 0.1
dising
- ------------------------------------------------------------------------------------------------------------------------------------
Metals/ 68,000 Rio Tinto Limited 844,392 849,671 0.3
Non-Ferrous
- ------------------------------------------------------------------------------------------------------------------------------------
Recreation & 70,000 TABCORP Holdings Limited 496,598 490,895 0.1
Other Con-
sumer Goods
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities-- 42,000 Australian Gas Light Company Limited 311,383 275,222 0.1
Electric &
Gas
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Australia 7,915,575 8,385,649 2.7
- ------------------------------------------------------------------------------------------------------------------------------------
Hong Kong
Banking 17,800 HSBC Holdings PLC 427,159 500,858 0.1
52,425 HSBC Holdings PLC (GBP) 1,343,613 1,528,333 0.5
------------------------------------------------
1,770,772 2,029,191 0.6
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial-- 89,000 Hutchison Whampoa Limited 632,773 617,457 0.2
Components
- ------------------------------------------------------------------------------------------------------------------------------------
Telecommu- 128,800 Hong Kong
nications Telecommunications Ltd. 258,830 215,290 0.1
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities-- 231,000 Hong Kong and China Gas
Electric & Company Ltd. 315,937 269,835 0.1
Gas
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in
Hong Kong 2,978,312 3,131,773 1.0
- ------------------------------------------------------------------------------------------------------------------------------------
Japan
Appliances & 54,000 Matsushita Electric Industrial
Household Company, Ltd. 882,749 903,642 0.3
Durables 14,700 Sony Corporation 1,086,505 1,112,848 0.4
------------------------------------------------
1,969,254 2,016,490 0.7
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
February 28, 1999 (10) Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------------
Shares Percent of
Industries Held Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
PACIFIC BASIN/ASIA (continued)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Japan (continued)
Automobiles 24,000 Honda Motor Co., Ltd. $ 809,984 $ 924,633 0.3%
- ------------------------------------------------------------------------------------------------------------------------------------
Banking 96,000 The Bank of Tokyo-
Mitsubishi, Ltd. 1,036,406 1,157,309 0.4
110,000 The Sanwa Bank, Ltd. 956,769 1,126,707 0.3
96,000 The Sumitomo Bank, Ltd. 1,092,855 1,158,118 0.4
------------------------------------------------
3,086,030 3,442,134 1.1
- ------------------------------------------------------------------------------------------------------------------------------------
Beverages 118 Japan Tobacco Inc 1,044,270 1,074,356 0.4
& Tobacco
- ------------------------------------------------------------------------------------------------------------------------------------
Building 150,000 Sekisui Chemical Co., Ltd. 896,127 948,407 0.3
Materials &
Components
- ------------------------------------------------------------------------------------------------------------------------------------
Chemicals 251,000 Asahi Chemical Industry
Co., Ltd. 1,124,575 1,204,004 0.4
203,000 Toray Industries, Inc. 988,557 888,189 0.3
------------------------------------------------
2,113,132 2,092,193 0.7
- ------------------------------------------------------------------------------------------------------------------------------------
Data 109,000 Fujitsu Limited 1,267,596 1,359,973 0.4
Processing &
Reproduction
- ------------------------------------------------------------------------------------------------------------------------------------
Electrical & 156,000 Hitachi Ltd. 919,903 986,343 0.3
Electronics 206 NTT Data Corporation 933,617 1,189,597 0.4
------------------------------------------------
1,853,520 2,175,940 0.7
- ------------------------------------------------------------------------------------------------------------------------------------
Electronic 74,000 Alpine Electronics 849,168 839,066 0.3
Components/ 12,000 Fujitsu Support and Service Inc. (FSAS) 649,007 891,249 0.3
Instruments 13,000 Rohm Company Ltd. 1,153,561 1,271,286 0.4
------------------------------------------------
2,651,736 3,001,601 1.0
- ------------------------------------------------------------------------------------------------------------------------------------
Financial Services 82,000 The Nomura Securities Co., Ltd. 651,606 674,692 0.2
- ------------------------------------------------------------------------------------------------------------------------------------
Food & 46,000 Kao Corporation 924,207 919,069 0.3
Household
Products
- ------------------------------------------------------------------------------------------------------------------------------------
Health & 12,000 Nichii Gakkan Company 478,028 601,922 0.2
Personal 28,000 Takeda Chemical Industries 957,909 963,075 0.3
Care 30,000 Yamanouchi Pharmaceutical Co., Ltd. 920,728 915,529 0.3
------------------------------------------------
2,356,665 2,480,526 0.8
- ------------------------------------------------------------------------------------------------------------------------------------
Industrial-- 39,000 Bridgestone Corporation 910,396 872,914 0.3
Components 110,000 Minebea Co., Ltd. 1,036,748 1,094,251 0.3
------------------------------------------------
1,947,144 1,967,165 0.6
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
February 28, 1999 (11) Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------------
Shares Percent of
Industries Held Investments Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
PACIFIC BASIN/ASIA (concluded)
====================================================================================================================================
<S> <C> <C> <C> <C> <C>
Japan (concluded)
Insurance 67,000 The Tokio Marine & Fire
Insurance Co. Ltd. $ 782,729 $ 717,333 0.2%
- ------------------------------------------------------------------------------------------------------------------------------------
Machinery & 63,000 Komori Corporation 1,230,653 1,136,571 0.4
Engineering
- ------------------------------------------------------------------------------------------------------------------------------------
Merchandising 19,000 Tokyo Electron Limited 663,051 864,947 0.3
- ------------------------------------------------------------------------------------------------------------------------------------
Metals-- 685,000 Nippon Steel Corporation 1,244,363 1,201,147 0.4
Steel
- ------------------------------------------------------------------------------------------------------------------------------------
Real Estate 154,000 Mitsubishi Estate Company, Limited 1,491,996 1,520,266 0.5
- ------------------------------------------------------------------------------------------------------------------------------------
Recreation & 10,300 Nintendo Company Ltd. 912,512 868,319 0.3
Other Con-
sumer Goods
- ------------------------------------------------------------------------------------------------------------------------------------
Telecommuni- 48 NTT Mobile Communication
cations Network, Inc. 1,866,592 1,950,430 0.7
236 Nippon Telegraph & Telephone
Corporation 1,892,974 1,945,776 0.6
------------------------------------------------
3,759,566 3,896,206 1.3
- ------------------------------------------------------------------------------------------------------------------------------------
Textiles & 32,000 Aoyamma Trading Co., Ltd. 855,228 863,261 0.3
Apparel 85,000 Wacoal Corp. 1,022,026 896,434 0.3
------------------------------------------------
1,877,254 1,759,695 0.6
- ------------------------------------------------------------------------------------------------------------------------------------
Utilities-- 47,600 Tokyo Electric Power 1,158,424 961,069 0.3
Electric & Gas
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Japan 34,691,819 36,002,732 11.8
- ------------------------------------------------------------------------------------------------------------------------------------
New Zealand
Telecommu- 127,000 Telecom Corporation of New
nications Zealand Limited 551,547 641,698 0.2
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in
New Zealand 551,547 641,698 0.2
- ------------------------------------------------------------------------------------------------------------------------------------
Singapore
Broadcasting 30,000 Singapore Press Holdings Ltd. 266,039 341,563 0.1
& Publishing
- ------------------------------------------------------------------------------------------------------------------------------------
Transporta- 28,000 Singapore Airlines Ltd. 'Foreign' 199,675 206,564 0.1
tion--Airlines
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in Singapore 465,714 548,127 0.2
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in the
Pacific Basin/Asia 46,602,967 48,709,979 15.9
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
February 28, 1999 (12) Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONCLUDED)
<TABLE>
<CAPTION>
In US Dollars
------------------------------------------------
Face Short-Term Percent of
Amount Securities Cost Value Net Assets
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial US$11,479,000 General Motors Acceptance Corp.,
Paper* 4.88% due 3/01/1999 $ 11,475,888 $ 11,475,888 3.7%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments in
Short-Term Securities 11,475,888 11,475,888 3.7
================================================
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investments $292,763,574 300,360,671 98.0
============
Time Deposit** 14,000,000 4.6
Liabilities in Excess of
Other Assets (7,842,335) (2.6)
--------------------------
Net Assets $306,518,336 100.0%
==========================
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Commercial Paper is traded on a discount basis; the interest rate shown
reflects the discount rate paid at the time of purchase by the Portfolio.
** Time deposit bears interest at 4.812% and matures on 3/01/1999.
PORTFOLIO CHANGES FOR THE QUARTER
ENDED FEBRUARY 28, 1999
================================================================================
Additions Deletions
- --------------------------------- ----------------------------------
Alpine Electronics JUSCO Co., Ltd.
- --------------------------------- ----------------------------------
Dixons Group PLC Nishimatsu Construction Co. Ltd.
- --------------------------------- ----------------------------------
Minebea Co., Ltd. Pioneer Electronic Corporation
- --------------------------------- ----------------------------------
Nintendo Company Ltd. Southern Electric PLC
- --------------------------------- ----------------------------------
Pharmacia & Upjohn, Inc.
(Depositary Shares)
- ---------------------------------
Sanofi SA
- ---------------------------------
Scottish and Southern Energy PLC
- ---------------------------------
Singapore Airlines Ltd. 'Foreign'
- ---------------------------------
Sony Corporation
- ---------------------------------
TABCORP Holdings Limited
- ---------------------------------
Telecom Italia Mobile (TIM) SpA
- ---------------------------------
Wacoal Corp.
- ---------------------------------
February 28, 1999 (13) Mercury International Fund
<PAGE>
PORTFOLIO INFORMATION
WORLDWIDE INVESTMENTS AS OF FEBRUARY 28, 1999
================================================================================
Ten Largest Percent of
Equity Holdings Net Assets
- --------------------------------------------------------------------------------
Telecom Italia SpA 2.6%
- --------------------------------------------------------------------------------
Glaxo Wellcome PLC 2.5
- --------------------------------------------------------------------------------
Vivendi 2.4
- --------------------------------------------------------------------------------
Nokia Oyj 'A' 2.3
- --------------------------------------------------------------------------------
Lloyds TSB Group PLC 2.0
- --------------------------------------------------------------------------------
Mannesmann AG 1.9
- --------------------------------------------------------------------------------
Novartis (Registered Shares) 1.9
- --------------------------------------------------------------------------------
Roche Holding AG 1.8
- --------------------------------------------------------------------------------
Unilever NV 'A' 1.7
- --------------------------------------------------------------------------------
ING Groep NV 1.6
- --------------------------------------------------------------------------------
Percent of
Ten Largest Countries Net Assets
- --------------------------------------------------------------------------------
United Kingdom 24.0%
- --------------------------------------------------------------------------------
Japan 11.8
- --------------------------------------------------------------------------------
France 11.2
- --------------------------------------------------------------------------------
Switzerland 9.3
- --------------------------------------------------------------------------------
Netherlands 8.8
- --------------------------------------------------------------------------------
Germany 8.5
- --------------------------------------------------------------------------------
Italy 5.6
- --------------------------------------------------------------------------------
Spain 3.6
- --------------------------------------------------------------------------------
Sweden 2.8
- --------------------------------------------------------------------------------
Australia 2.7
- --------------------------------------------------------------------------------
Ten Largest Industries Percent of
(Equity Investments) Net Assets
- --------------------------------------------------------------------------------
Telecommunications 13.7%
- --------------------------------------------------------------------------------
Banking 11.9
- --------------------------------------------------------------------------------
Health & Personal Care 10.3
- --------------------------------------------------------------------------------
Insurance 7.7
- --------------------------------------------------------------------------------
Electrical & Electronics 7.6
- --------------------------------------------------------------------------------
Energy Sources 5.1
- --------------------------------------------------------------------------------
Utilities--Electric & Gas 4.8
- --------------------------------------------------------------------------------
Food & Household Products 4.7
- --------------------------------------------------------------------------------
Business/Public Services 4.2
- --------------------------------------------------------------------------------
Merchandising 3.8
- --------------------------------------------------------------------------------
February 28, 1999 (14) 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
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
[LOGO] Printed on post-consumer recycled paper MERCINTL--2/99
