QUARTERLY REPORT
AUGUST 31, 1999
[GRAPHIC OMITTED]
Mercury
Pan-European
Growth
Fund OF MERCURY ASSET
MANAGEMENT FUNDS, INC.
----------------
MERCURY
ASSET MANAGEMENT
----------------
<PAGE>
MERCURY MASTER
PAN-EUROPEAN GROWTH PORTFOLIO
<TABLE>
<CAPTION>
INDUSTRY WEIGHTINGS RELATIVE TO THE MSCI EUROPE INDEX
===========================================================================================================
As of August 31, 1999 Portfolio Allocation Index Allocation Portfolio Versus Index
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CAPITAL EQUIPMENT
Aerospace & Military Technology 0.4% 0.5% -0.1%
Construction & Housing 1.2 0.7 +0.5
Data Processing & Reproduction 0.0 0.0 0.0
Electrical & Electronics 7.4 5.2 +2.2
Electronic Components & Instruments 0.0 0.5 -0.5
Energy Equipment & Services 0.0 0.1 -0.1
Industrial Components 0.0 0.6 -0.6
Machinery & Engineering 2.4 1.1 +1.3
- -----------------------------------------------------------------------------------------------------------
Total Capital Equipment 11.4 8.7 +2.7
- -----------------------------------------------------------------------------------------------------------
CONSUMER GOODS
Appliances & Household Durables 0.6 0.7 -0.1
Automobiles 0.9 2.8 -1.9
Beverages & Tobacco 1.8 1.9 -0.1
Food & Household Products 4.1 3.5 +0.6
Health & Personal Care 8.5 10.9 -2.4
Recreation & Other Consumer Goods 0.0 0.9 -0.9
Textiles & Apparel 0.0 0.1 -0.1
- -----------------------------------------------------------------------------------------------------------
Total Consumer Goods 15.9 20.8 -4.9
- -----------------------------------------------------------------------------------------------------------
ENERGY
Energy Sources 8.4 8.7 -0.3
Utilities--Electric & Gas 3.0 4.4 -1.4
- -----------------------------------------------------------------------------------------------------------
Total Energy 11.4 13.1 -1.7
- -----------------------------------------------------------------------------------------------------------
FINANCE
Banking 13.6 15.3 -1.7
Financial Services 0.0 1.3 -1.3
Insurance 7.2 8.2 -1.0
Real Estate 0.0 0.6 -0.6
- -----------------------------------------------------------------------------------------------------------
Total Finance 20.8 25.4 -4.6
- -----------------------------------------------------------------------------------------------------------
MATERIALS
Building Materials & Components 0.2 1.6 -1.4
Chemicals 4.2 2.0 +2.2
Forest Products & Paper 0.0 0.4 -0.4
Metals/Non Ferrous 0.8 0.4 +0.4
Metals--Steel 0.6 0.5 +0.1
Miscellaneous Materials & Commodities 0.0 0.2 -0.2
- -----------------------------------------------------------------------------------------------------------
Total Materials 5.8 5.1 +0.7
- -----------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY
Multi-Industry 0.6 0.9 -0.3
- -----------------------------------------------------------------------------------------------------------
Total Multi-Industry 0.6 0.9 -0.3
- -----------------------------------------------------------------------------------------------------------
SERVICES
Broadcasting & Publishing 3.8 1.5 +2.3
Business/Public Services 7.8 4.9 +2.9
Leisure/Tourism 2.1 1.3 +0.8
Merchandising 7.7 4.7 +3.0
Telecommunications 12.0 12.3 -0.3
Transportation--Airlines 0.0 0.5 -0.5
Transportation--Road & Rail 0.0 0.1 -0.1
Transportation--Shipping 0.0 0.6 -0.6
Wholesale & International Trade 0.0 0.1 -0.1
- -----------------------------------------------------------------------------------------------------------
Total Services 33.4 26.0 +7.4
- -----------------------------------------------------------------------------------------------------------
CASH/CASH EQUIVALENT 0.7 0.0 +0.7
- -----------------------------------------------------------------------------------------------------------
TOTAL 100.0% 100.0%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
+ Amount is less than 0.1%.
August 31, 1999 (1) Mercury Pan-European Growth Fund
<PAGE>
DEAR SHAREHOLDER
For the three months ended August 31, 1999, Mercury Pan-European Growth Fund's
Class I, Class A, Class B and Class C Shares had total returns of +4.17%,
+4.08%, +3.90% and +3.90%, respectively. This compares with the total return of
+3.67% for the unmanaged Morgan Stanley Capital International (MSCI) Europe
Index for the same three-month period. (Investment results shown do not reflect
sales charges and would be lower if sales charges were included. Complete
performance information can be found on pages 4 and 5 of this report to
shareholders.)
Investment Environment
European markets were volatile during most of the three-month period but
finished the quarter on a positive note. There were some encouraging signs that
economic activity was picking up across Europe. However, there was concern that
higher interest rates in the United States would negatively impact the outlook
for markets globally.
There was further evidence of a recovery in Eurozone growth with domestic demand
benefiting from easier credit conditions and less-restrictive fiscal policy.
Meanwhile, exports were boosted by a recovery in global (particularly Asian)
growth and a weak euro. There were clear signs that business confidence
continued to improve in Germany and France. At the same time, consumer
confidence, which improved last year, continued to hold up well and was
supported by improving employment trends. Additionally, the outlook for
inflation remained benign. The main reason for the recovery in the euro was the
improvement in Europe's economic outlook. The currency started the August
quarter at (euro)1.03 to the US dollar. After reaching a low of (euro)1.01
relative to the US dollar, the euro bounced sharply to above (euro)1.07.
However, by August 31, 1999 it had fallen back against a background of rising US
interest rates.
During the August quarter, the best performing markets came from Scandinavian
countries. Finland was driven by an exceptionally strong performance by Nokia
Oyj. Sweden, Norway and Denmark also all recorded returns of over 5%. The worst
performing markets were Italy along with Spain and Portugal. The Italian economy
continued to lag the rest of Europe, while weakness in utilities and the banking
sector held back both the Spanish and Portuguese markets.
In sector terms, rotation tended to favor the more value-oriented sectors such
as materials. The oil sector also outperformed against a background of rising
oil prices. Growth sectors such as consumer goods and services underperformed.
The insurance sector recovered toward the end of the quarter after a period of
weakness driven by higher bond yields.
Corporate activity continued to support the market with a number of large
transactions announced. During the August quarter, Total Fina SA bid for Elf
Aquitaine SA. Then a counter bid was made by Elf for Total. The merged company
will be the fourth-largest oil company in the world and should offer substantial
opportunities for cost cutting. Meanwhile, a three-way merger was announced
between Alusuisse, Pechiney SA and
August 31, 1999 (2) Mercury Pan-European Growth Fund
<PAGE>
Alcan in the aluminum sector, and Deutsche Telekom AG acquired the UK mobile
telephone operator, One2One. There was also activity in the retail sector in
France where Carrefour SA and Promodes announced their intention to merge,
thereby creating the world's second-largest retailer.
Portfolio Activity
During the August quarter, the Portfolio remained fully invested. We increased
our exposure to the oil sector because we believed that oil prices would remain
well supported in the near term. We also added selectively to companies in the
capital goods sector. After a period of strong performance, we took some profits
in services and mobile telephone stocks. Toward the end of the period, we made
some selective purchases of media stocks.
Investment Outlook
We believe that the months ahead should continue to reflect the recovery in
economic activity across the Eurozone. In turn, we anticipate that this should
be supportive for the euro. Corporate activity is expected to continue although
it is likely to slow down ahead of the end of the year because of concerns about
Year 2000. We believe this is likely to be a temporary phenomenon and would
expect corporate activity to resume early next year. With unemployment still at
relatively high levels, it would seem that there is limited upward pressure on
interest rates in Europe, and the long-term restructuring picture remains firmly
in place.
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
September 30, 1999
August 31, 1999 (3) Mercury Pan-European Growth Fund
<PAGE>
FUND PERFORMANCE DATA
ABOUT FUND PERFORMANCE
The Fund offers four classes of shares, each with its own sales charge and
expense structure, allowing you to invest in the way that best suits your needs.
CLASS I SHARES incur a maximum initial sales charge of 5.25% and bear no ongoing
distribution and account maintenance fees. Class I shares are available only to
eligible investors.
CLASS A SHARES incur a maximum initial sales charge of 5.25% and an account
maintenance fee of 0.25% (but no distribution fee).
CLASS B SHARES are subject to a maximum contingent deferred sales charge of 4%
if redeemed during the first two years, decreasing to 3% for each of the next
two years and decreasing 1% each year thereafter to 0% after the sixth year. In
addition, Class B shares are subject to a distribution fee of 0.75% and an
account maintenance fee of 0.25%. These shares automatically convert to Class A
shares after approximately 8 years.
CLASS C SHARES are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. In addition, Class C shares may be subject to a 1%
contingent deferred sales charge if redeemed within one year after purchase.
None of the past results shown should be considered a representation of future
performance. Figures shown in the "Recent Performance Results" and "Aggregate
Total Return" tables assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each class of
shares will vary because of the different levels of account maintenance,
distribution and transfer agency fees applicable to each class, which are
deducted from the income available to be paid to shareholders.
August 31, 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 6/30/99 +5.80% +0.25%
- --------------------------------------------------------------------------------
* 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 6/30/99 +5.60% +0.06%
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without With
Class B Shares* CDSC CDSC**
- --------------------------------------------------------------------------------
Inception (10/30/98)
through 6/30/99 +5.00% +1.00%
- --------------------------------------------------------------------------------
* 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 6/30/99 +5.00% +4.00%
- --------------------------------------------------------------------------------
* 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 +4.17% +7.40%
- --------------------------------------------------------------------------------
Class A +4.08 +7.20
- --------------------------------------------------------------------------------
Class B +3.90 +6.50
- --------------------------------------------------------------------------------
Class C +3.90 +6.50
- --------------------------------------------------------------------------------
* 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 periods shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the ex-dividend date. The Fund's inception date is 10/30/98.
August 31, 1999 (5) Mercury Pan-European Growth Fund
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
MERCURY MASTER PAN-EUROPEAN GROWTH PORTFOLIO
================================================================================================================
In US Dollars
---------------------------------------------
Percent of
Shares Held Investments Cost Value Net Assets
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aerospace & Military Technology
France 99,149 Aerospatiale Matra $ 2,195,743 $ 2,229,505 0.4%
- ----------------------------------------------------------------------------------------------------------------
Total Investments in
Aerospace &
Military Technology 2,195,743 2,229,505 0.4
- ----------------------------------------------------------------------------------------------------------------
Appliances & Household Durables
Sweden 160,000 Electrolux AB 'B' 2,568,456 3,221,346 0.6
- ----------------------------------------------------------------------------------------------------------------
Total Investments in
Appliances &
Household Durables 2,568,456 3,221,346 0.6
- ----------------------------------------------------------------------------------------------------------------
Automobiles
Germany 64,000 DaimlerChrysler AG 5,337,046 4,824,127 0.9
- ----------------------------------------------------------------------------------------------------------------
Total Investments in
Automobiles 5,337,046 4,824,127 0.9
- ----------------------------------------------------------------------------------------------------------------
Banking
France 23,160 Compagnie Financiere
de Paribas (CFP) 2,725,124 2,698,829 0.5
24,997 Societe Generale 'A' 4,049,399 4,889,943 0.9
---------------------------------------------
6,774,523 7,588,772 1.4
- ----------------------------------------------------------------------------------------------------------------
Germany 60,000 Deutsche Bank AG
(Registered Shares) 3,725,143 4,098,227 0.7
75,000 HypoVereinsbank 5,765,854 4,441,858 0.8
---------------------------------------------
9,490,997 8,540,085 1.5
- ----------------------------------------------------------------------------------------------------------------
Ireland 252,868 Allied Irish Banks PLC 4,730,463 3,264,832 0.6
- ----------------------------------------------------------------------------------------------------------------
Italy 1,150,000 Banca Intesa SpA 6,110,980 4,856,220 0.9
900,000 Unicredito Italiano SpA 4,758,648 4,152,068 0.8
---------------------------------------------
10,869,628 9,008,288 1.7
- ----------------------------------------------------------------------------------------------------------------
Spain 600,000 Banco Santander Central
Hispano, SA 5,790,593 6,023,824 1.1
- ----------------------------------------------------------------------------------------------------------------
Sweden 860,000 Nordbanken Holding AB 5,039,028 4,850,212 0.9
- ----------------------------------------------------------------------------------------------------------------
Switzerland 130,000 Safra Republic Holdings, SA 6,672,642 8,965,813 1.6
32,000 UBS AG (Registered Shares) 9,779,395 9,028,511 1.6
---------------------------------------------
16,452,037 17,994,324 3.2
- ----------------------------------------------------------------------------------------------------------------
United 170,000 Barclays PLC 3,680,708 5,053,071 0.9
Kingdom 465,000 HSBC Holdings PLC 4,574,253 5,749,054 1.0
535,000 Lloyds TSB Group PLC 6,827,638 7,396,725 1.3
---------------------------------------------
15,082,599 18,198,850 3.2
- ----------------------------------------------------------------------------------------------------------------
Total Investments in Banking 74,229,868 75,469,187 13.6
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
August 31, 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
France 12,000 LVMH (Louis Vuitton
Moet Hennessy) $ 2,216,278 $ 3,649,766 0.7%
14,000 LVMH (Louis Vuitton Moet
Hennessy) (Rights) (a) 0 421,963 0.1
-----------------------------------------------
2,216,278 4,071,729 0.8
- ------------------------------------------------------------------------------------------------------------------
United 565,000 Diageo PLC 6,012,382 5,719,049 1.0
Kingdom
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Beverages & Tobacco 8,228,660 9,790,778 1.8
- ------------------------------------------------------------------------------------------------------------------
Broadcasting & Publishing
Belgium 60,500 Compagnie Luxembourgeoise
pour l'Audio-Visuel et la
Finance (Audiofina) 2,606,400 2,938,652 0.5
- ------------------------------------------------------------------------------------------------------------------
Italy 2,380,000 Seat Pagine Gialle SpA 2,922,031 3,278,899 0.6
- ------------------------------------------------------------------------------------------------------------------
Netherlands 158,210 Wolters Kluwer NV 'A' 7,287,379 5,879,185 1.1
- ------------------------------------------------------------------------------------------------------------------
United 400,000 Carlton Communications PLC 3,369,614 3,030,236 0.6
Kingdom 940,000 Reed International PLC 7,577,430 6,248,858 1.1
-----------------------------------------------
10,947,044 9,279,094 1.7
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Broadcasting & Publishing 23,762,854 21,375,830 3.9
- ------------------------------------------------------------------------------------------------------------------
Building Materials & Components
Belgium 12,292 Cimenteries CBR
Cementbedrijven 1,171,856 1,117,291 0.2
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Building Materials &
Components 1,171,856 1,117,291 0.2
- ------------------------------------------------------------------------------------------------------------------
Business/Public Services
Austria 100,000 Flughafen Wien AG 4,735,966 3,953,596 0.7
- ------------------------------------------------------------------------------------------------------------------
France 20,000 Cap Gemini SA 3,136,474 3,431,025 0.6
165,000 Vivendi 12,053,376 12,733,326 2.3
-----------------------------------------------
15,189,850 16,164,351 2.9
- ------------------------------------------------------------------------------------------------------------------
Germany 9,500 SAP AG (Systeme,
Anwendungen, Produkte in
der Datenverarbeitung) 3,671,161 3,329,678 0.6
- ------------------------------------------------------------------------------------------------------------------
Spain 283,500 Autopistas, Concesionaria
Espanola SA 4,013,271 3,169,491 0.6
- ------------------------------------------------------------------------------------------------------------------
Switzerland 4,759 Adecco SA (Registered Shares) 1,987,774 2,622,601 0.5
- ------------------------------------------------------------------------------------------------------------------
United 300,000 BAA PLC 3,412,894 3,133,065 0.6
Kingdom
</TABLE>
August 31, 1999 (7) 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>
Business/Public Services (concluded)
United 515,000 Compass Group PLC $ 5,184,845 $ 4,807,487 0.9%
Kingdom 535,000 Hays PLC 4,160,358 5,694,747 1.0
(concluded) -----------------------------------------------
12,758,097 13,635,299 2.5
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Business/Public Services 42,356,119 42,875,016 7.8
- ------------------------------------------------------------------------------------------------------------------
Chemicals
Germany 368,000 Bayer AG 15,316,330 15,986,676 2.9
45,000 Henkel KGaA 3,630,986 2,798,133 0.5
-----------------------------------------------
18,947,316 18,784,809 3.4
- ------------------------------------------------------------------------------------------------------------------
Netherlands 90,000 Akzo Nobel NV 3,418,619 4,185,323 0.8
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Chemicals 22,365,935 22,970,132 4.2
- ------------------------------------------------------------------------------------------------------------------
Construction & Housing
France 60,000 Societe Generale
d'Entreprises SA 2,771,745 2,977,707 0.5
- ------------------------------------------------------------------------------------------------------------------
Germany 85,947 Hochtief AG 3,227,732 3,729,178 0.7
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Construction & Housing 5,999,477 6,706,885 1.2
- ------------------------------------------------------------------------------------------------------------------
Electrical & Electronics
Finland 125,000 Nokia Oyj 7,913,593 10,425,038 1.9
- ------------------------------------------------------------------------------------------------------------------
France 30,000 Atos SA 3,103,157 3,417,301 0.6
- ------------------------------------------------------------------------------------------------------------------
Germany 158,500 Siemens AG 9,772,973 13,319,345 2.4
- ------------------------------------------------------------------------------------------------------------------
Netherlands 54,000 Koninklijke (Royal)
Philips Electronics NV 3,840,413 5,561,111 1.0
- ------------------------------------------------------------------------------------------------------------------
Sweden 260,000 Telefonaktiebolaget
LM Ericsson 'B' 6,101,397 8,388,114 1.5
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Electrical & Electronics 30,731,533 41,110,909 7.4
- ------------------------------------------------------------------------------------------------------------------
Energy Sources
France 38,000 Elf Aquitaine SA 5,084,319 6,659,356 1.2
66,000 Total Fina SA 'B' 7,672,796 8,500,496 1.5
-----------------------------------------------
12,757,115 15,159,852 2.7
- ------------------------------------------------------------------------------------------------------------------
Italy 60,000 ENI SpA 356,419 360,416 0.1
- ------------------------------------------------------------------------------------------------------------------
United 970,000 BP Amoco PLC 14,841,337 18,000,671 3.3
Kingdom 1,580,000 Shell Transport &
Trading Company 10,006,267 12,591,387 2.3
-----------------------------------------------
24,847,604 30,592,058 5.6
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Energy Sources 37,961,138 46,112,326 8.4
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
August 31, 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
Netherlands 142,000 Koninklijke Numico NV $ 6,248,855 $ 5,831,476 1.0%
- ------------------------------------------------------------------------------------------------------------------
Switzerland 3,600 Nestle SA
(Registered Shares) 7,638,425 7,104,013 1.3
- ------------------------------------------------------------------------------------------------------------------
United 695,000 Cadbury Schweppes PLC 5,316,685 4,385,668 0.8
Kingdom 535,000 Unilever PLC 6,108,003 5,045,761 0.9
-----------------------------------------------
11,424,688 9,431,429 1.7
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Food & Household Products 25,311,968 22,366,918 4.0
- ------------------------------------------------------------------------------------------------------------------
Health & Personal Care
Switzerland 9,700 Novartis AG
(Registered Shares) 18,270,814 13,955,913 2.5
850 Roche Holding AG 10,048,819 9,828,405 1.8
-----------------------------------------------
28,319,633 23,784,318 4.3
- ------------------------------------------------------------------------------------------------------------------
United 133,000 AstraZeneca Group PLC 5,509,349 5,278,170 0.9
Kingdom 415,000 Glaxo Wellcome PLC 12,858,602 10,908,529 2.0
505,000 SmithKline Beecham PLC 6,296,725 6,576,263 1.2
-----------------------------------------------
24,664,676 22,762,962 4.1
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Health & Personal Care 52,984,309 46,547,280 8.4
- ------------------------------------------------------------------------------------------------------------------
Insurance
Belgium 232,000 Fortis 'B' 8,337,039 7,959,978 1.4
- ------------------------------------------------------------------------------------------------------------------
France 57,000 Axa 6,986,244 7,088,603 1.3
- ------------------------------------------------------------------------------------------------------------------
Germany 17,500 Allianz AG
(Registered Shares) 5,856,066 4,605,755 0.8
- ------------------------------------------------------------------------------------------------------------------
Italy 94,000 Assicurazioni Generali 3,575,864 3,170,584 0.6
- ------------------------------------------------------------------------------------------------------------------
Netherlands 163,000 ING Groep NV 8,936,987 8,930,905 1.6
- ------------------------------------------------------------------------------------------------------------------
United 271,000 Allied Zurich PLC 3,588,309 3,311,336 0.6
Kingdom 575,000 Royal & Sun Alliance
Insurance Group PLC 5,541,232 4,785,556 0.9
-----------------------------------------------
9,129,541 8,096,892 1.5
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Insurance 42,821,741 39,852,717 7.2
- ------------------------------------------------------------------------------------------------------------------
Leisure/Tourism
France 40,000 Accor SA 8,441,645 9,619,538 1.8
- ------------------------------------------------------------------------------------------------------------------
United 1,150,000 Thomson Travel Group PLC 2,716,859 2,443,590 0.4
Kingdom
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Leisure/Tourism 11,158,504 12,063,128 2.2
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
August 31, 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
France 52,000 Sidel SA $ 5,070,815 $ 5,747,653 1.0%
- ------------------------------------------------------------------------------------------------------------------
Sweden 140,063 Atlas Copco AB 'A' 3,174,771 4,043,056 0.7
- ------------------------------------------------------------------------------------------------------------------
Switzerland 36,000 ABB Ltd. 3,438,548 3,670,803 0.7
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Machinery & Engineering 11,684,134 13,461,512 2.4
- ------------------------------------------------------------------------------------------------------------------
Merchandising
Belgium 107,500 Delhaize "Le Lion" SA 9,346,711 9,135,764 1.7
- ------------------------------------------------------------------------------------------------------------------
France 18,000 Carrefour SA 2,253,357 2,926,400 0.5
37,000 Etablissements
Economiques du Casino
Guichard-Perrachon SA 3,733,510 3,894,372 0.7
60,000 Pinault-Printemps-Redoute SA 10,334,371 10,388,088 1.9
-----------------------------------------------
16,321,238 17,208,860 3.1
- ------------------------------------------------------------------------------------------------------------------
Germany 22,000 Metro AG 1,429,343 1,261,139 0.2
80,000 Metro AG (Preferred) 3,214,778 2,554,794 0.5
-----------------------------------------------
4,644,121 3,815,933 0.7
- ------------------------------------------------------------------------------------------------------------------
Netherlands 140,000 Hagemeyer NV 4,577,311 3,473,253 0.6
- ------------------------------------------------------------------------------------------------------------------
United 860,000 Safeway PLC 4,211,587 3,564,946 0.6
Kingdom 1,775,000 Tesco PLC 4,848,844 5,254,612 1.0
-----------------------------------------------
9,060,431 8,819,558 1.6
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Merchandising 43,949,812 42,453,368 7.7
- ------------------------------------------------------------------------------------------------------------------
Metals/Non-Ferrous
United 240,000 Rio Tinto PLC
Kingdom (Registered Shares) 2,877,691 4,318,810 0.8
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Metals/Non-Ferrous 2,877,691 4,318,810 0.8
- ------------------------------------------------------------------------------------------------------------------
Metals--Steel
France 215,000 Usinor SA 3,379,612 3,325,191 0.6
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Metals--Steel 3,379,612 3,325,191 0.6
- ------------------------------------------------------------------------------------------------------------------
Multi-Industry
United 665,000 Invensys PLC 3,298,392 3,392,346 0.6
Kingdom
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Multi-Industry 3,298,392 3,392,346 0.6
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
August 31, 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
Germany 125,000 Deutsche Telekom AG $ 3,993,610 $ 5,529,229 1.0%
71,000 Mannesmann AG 7,978,605 10,883,422 2.0
-----------------------------------------------
11,972,215 16,412,651 3.0
- ------------------------------------------------------------------------------------------------------------------
Greece 140,000 Hellenic Telecommunications
Organization SA (OTE) 3,253,337 2,900,521 0.5
- ------------------------------------------------------------------------------------------------------------------
Italy 1,530,000 Telecom Italia Mobile
(TIM) SpA 5,741,209 5,297,925 1.0
925,000 Telecom Italia SpA
(Registered) 5,189,490 5,292,752 1.0
-----------------------------------------------
10,930,699 10,590,677 2.0
- ------------------------------------------------------------------------------------------------------------------
Netherlands 170,000 Libertel NV 3,377,638 3,230,442 0.6
- ------------------------------------------------------------------------------------------------------------------
Portugal 25,000 Telecel-Comunicacoes
Pessoais, SA 3,223,514 3,225,164 0.6
- ------------------------------------------------------------------------------------------------------------------
Spain 525,000 Telefonica SA 7,640,269 8,369,062 1.5
- ------------------------------------------------------------------------------------------------------------------
United 500,000 British Telecommunications
Kingdom PLC 7,146,789 7,655,926 1.4
595,000 Cable & Wireless
Communications PLC 5,281,541 6,209,132 1.1
370,000 Vodafone AirTouch PLC 6,896,056 7,454,767 1.3
-----------------------------------------------
19,324,386 21,319,825 3.8
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Telecommunications 59,722,058 66,048,342 12.0
- ------------------------------------------------------------------------------------------------------------------
Utilities--Electric & Gas
Belgium 17,000 Electrabel SA 6,246,929 5,676,604 1.0
- ------------------------------------------------------------------------------------------------------------------
Germany 100,000 Veba AG 5,386,035 6,365,871 1.2
- ------------------------------------------------------------------------------------------------------------------
Spain 210,000 Endesa SA 5,593,093 4,212,243 0.8
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Utilities--Electric & Gas 17,226,057 16,254,718 3.0
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Face Amount Short-Term Securities
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Com- US$2,022,000 General Motors Acceptance
mercial Corp., 5.56% due 9/01/1999 2,022,000 2,022,000 0.4
Paper*
- ------------------------------------------------------------------------------------------------------------------
Total Investments in
Short-Term Securities 2,022,000 2,022,000 0.4
- ------------------------------------------------------------------------------------------------------------------
Total Investments $533,344,963 549,909,662 99.7
============
Other Assets Less
Liabilities 1,383,714 0.3
-----------------------
Net Assets $551,293,376 100.0%
=======================
- ------------------------------------------------------------------------------------------------------------------
</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.
(a) The rights may be exercised until 9/21/1999.
August 31, 1999 (11) Mercury Pan-European Growth Fund
<PAGE>
PORTFOLIO INFORMATION
WORLDWIDE INVESTMENTS AS OF AUGUST 31, 1999
================================================================================
Ten Largest Percent of
Equity Holdings Net Assets
- --------------------------------------------------------------------------------
BP Amoco PLC 3.3%
- --------------------------------------------------------------------------------
Bayer AG 2.9
- --------------------------------------------------------------------------------
Novartis AG (Registered Shares) 2.5
- --------------------------------------------------------------------------------
Siemens AG 2.4
- --------------------------------------------------------------------------------
Vivendi 2.3
- --------------------------------------------------------------------------------
Shell Transport & Trading Company 2.3
- --------------------------------------------------------------------------------
Glaxo Wellcome PLC 2.0
- --------------------------------------------------------------------------------
Mannesmann AG 2.0
- --------------------------------------------------------------------------------
Nokia Oyj 1.9
- --------------------------------------------------------------------------------
Pinault-Printemps-Redoute SA 1.9
- --------------------------------------------------------------------------------
Percent of
Ten Largest Industries Net Assets
- --------------------------------------------------------------------------------
Banking 13.6%
- --------------------------------------------------------------------------------
Telecommunications 12.0
- --------------------------------------------------------------------------------
Health & Personal Care 8.4
- --------------------------------------------------------------------------------
Energy Sources 8.4
- --------------------------------------------------------------------------------
Business/Public Services 7.8
- --------------------------------------------------------------------------------
Merchandising 7.7
- --------------------------------------------------------------------------------
Electrical & Electronics 7.4
- --------------------------------------------------------------------------------
Insurance 7.2
- --------------------------------------------------------------------------------
Chemicals 4.2
- --------------------------------------------------------------------------------
Food & Household Products 4.0
- --------------------------------------------------------------------------------
GEOGRAPHIC ALLOCATION
================================================================================
As a Percentage of Net Assets as of August 31, 1999
[THE FOLLOWING TABLE WAS DEPICTED AS A PIE CHART IN THE PRINTED MATERIAL.]
Belgium 4.8%
Finland 1.9%
France 17.1%
Germany 15.2%
Italy 5.0%
Netherlands 6.7%
Spain 4.0%
Sweden 3.7%
Switzerland 10.0%
United Kingdom 28.5%
Cash Equivalent 0.7%
Other 2.4%*
* Includes Austria, Portugal, Greece and Ireland.
August 31, 1999 (12) Mercury Pan-European Growth Fund
<PAGE>
PORTFOLIO INFORMATION (CONCLUDED)
PORTFOLIO CHANGES FOR THE QUARTER ENDED AUGUST 31, 1999
================================================================================
Additions
- --------------------------------------------------------------------------------
ABB Ltd.
- --------------------------------------------------------------------------------
Atos SA
- --------------------------------------------------------------------------------
Cimenteries CBR Cementbedrijven
- --------------------------------------------------------------------------------
* Clariant AG (Registered)
- --------------------------------------------------------------------------------
Compagnie Financiere de Paribas (CFP)
- --------------------------------------------------------------------------------
ENI SpA
- --------------------------------------------------------------------------------
* Freeserve PLC
- --------------------------------------------------------------------------------
* Gucci Group NV
- --------------------------------------------------------------------------------
Invensys PLC
- --------------------------------------------------------------------------------
* Investor AB `B'
- --------------------------------------------------------------------------------
Libertel NV
- --------------------------------------------------------------------------------
* Monte dei Paschi di Siena
- --------------------------------------------------------------------------------
* Sogecable SA
- --------------------------------------------------------------------------------
Telecel-Comunicacoes Pessoais, SA
- --------------------------------------------------------------------------------
* Telefonica Publicidad e Informacion, SA
- --------------------------------------------------------------------------------
* VNU NV
- --------------------------------------------------------------------------------
Deletions
- --------------------------------------------------------------------------------
Bank Austria AG
- --------------------------------------------------------------------------------
* Clariant AG (Registered)
- --------------------------------------------------------------------------------
Credit Commercial de France
- --------------------------------------------------------------------------------
* Freeserve PLC
- --------------------------------------------------------------------------------
* Gucci Group NV
- --------------------------------------------------------------------------------
Guilbert SA
- --------------------------------------------------------------------------------
Heidelberger Zement AG
- --------------------------------------------------------------------------------
Independent Newspapers PLC
- --------------------------------------------------------------------------------
* Investor AB 'B'
- --------------------------------------------------------------------------------
* Monte dei Paschi di Siena
- --------------------------------------------------------------------------------
Orange PLC
- --------------------------------------------------------------------------------
PizzaExpress PLC
- --------------------------------------------------------------------------------
Societe Europeenne des Satellites
- --------------------------------------------------------------------------------
* Sogecable SA
- --------------------------------------------------------------------------------
Swisscom AG (Registered Shares)
- --------------------------------------------------------------------------------
Tecnost SpA
- --------------------------------------------------------------------------------
* Telefonica Publicidad e Informacion, SA
- --------------------------------------------------------------------------------
VA Technologie AG
- --------------------------------------------------------------------------------
* VNU NV
- --------------------------------------------------------------------------------
Volkswagen AG
- --------------------------------------------------------------------------------
* Added and deleted in the same quarter.
- --------------------------------------------------------------------------------
August 31, 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
August 31, 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.
EMercury Pan-European Growth Fund of
Mercury Asset Management Funds, Inc.
Box 9011
Princeton, NJ
08543-9011
[RECYCLE LOGO] Printed on post-consumer recycled paper MERCPAN--8/99
