SEMI-ANNUAL REPORT
MAY 31, 1999
[GRAPHIC OMITTED]
Mercury
Global
Balanced
Fund
OF MERCURY ASSET
MANAGEMENT FUNDS, INC.
--------------------
M E R C U R Y
ASSET MANAGEMENT
--------------------
<PAGE>
MERCURY MASTER
GLOBAL BALANCED PORTFOLIO
SECTOR REPRESENTATION OF EQUITIES AND
FIXED-INCOME SECURITIES
- --------------------------------------------------------------------------------
As a Percentage of Net Assets as of May 31, 1999
A pie chart illustrating the following percentages
[GRAPHIC OMITTED]
Services 16.6%
Finance 11.0%
Consumer Goods 10.3%
Energy 4.8%
Capital Equipment 10.9%
Materials 0.8%
Government Obligations 36.8%
Cash Equivalent 8.8%
GEOGRAPHIC ASSET MIX
- --------------------------------------------------------------------------------
As a Percentage of Net Assets as of May 31, 1999
A pie chart illustrating the following percentages
[GRAPHIC OMITTED]
Pacific Basin/Asia 12.0%
Europe 34.2%
North America 53.8%
May 31, 1999 2 Mercury Global Balanced Fund
<PAGE>
DEAR SHAREHOLDER
We are pleased to provide you with this first semi-annual report to shareholders
for Mercury Global Balanced Fund. The Fund seeks a combination of long-term
capital growth and current income primarily through investments in two
segments--equities and bonds. The Fund will seek to achieve its objective by
investing all of its assets in Mercury Master Global Balanced Portfolio of
Mercury Asset Management Master Trust, which has the same investment objective
as the Fund. The Portfolio invests in a mix of stocks and high-quality bonds
located in the United States and other developed countries. The Portfolio's
neutral position consists of approximately 60% of its portfolio in stocks and
40% in bonds, although the Portfolio may vary each of these percentages as much
as 15% in either direction based on current economic or market conditions. The
Fund's investment guidelines restrict investment to countries within the
benchmark indexes, prohibiting investment in emerging markets. Currency exposure
within the fixed-income component of the Fund is normally hedged back into US
dollars in order to protect returns to US dollar-based investors. The Fund's
investment experience will correspond to the investment experience of the
Portfolio. In this and future reports to shareholders, we will provide
information on the Fund's performance, discuss our investment strategies, and
highlight some of the Portfolio's holdings. Complete performance information can
be found on page 6 of this report to shareholders.
Market Review
In the United States, there was a wide divergence in the performance of the
broad market indexes, with the Standard & Poor's 500 Index and the
technology-weighted NASDAQ both down for the period, while the Dow Jones
Industrial Average reached a new all-time high. There were early signs that
inflationary pressures may be building up in the economy with the Consumer Price
Index for April rising 0.7%, well above the consensus estimate of 0.4% and the
previous month's figure of 0.2%. The Federal Reserve Board responded with
suggestions that it might be inclined to tighten its monetary policy, which
indeed occurred after the close of the reporting period.
Further signs of an improvement in the world economy have continued to
strengthen US cyclical stocks, especially the industrial-sensitive chemical and
paper industries where some degree of pricing power is returning. Merger and
acquisition activity is expected to remain robust, especially in the
telecommunications area where the fight for Internet business will be a driving
force. However, continued expansion of price/earnings multiples, which has been
the driving force of the strong performance of many growth stocks, is unlikely
to occur in an uncertain interest rate environment.
Continued weakness in the Japanese yen has resulted from a weak economy, the
Federal Reserve Board's shift to a tightening bias, and the recent widening of
the US/Japan long-term bond yield spread. A modest tightening of monetary policy
ensued as the Bank of Japan cut its injection of overnight liquidity into the
banking system. The decline in the yen and in Japanese bond yields had
previously eased overall monetary conditions so this action is unlikely to have
much economic impact, in our opinion. Moreover, Japan did not want to see a much
weaker yen heading into the Group of Seven summit meetings held in mid-June
1999.
Japanese equity prices fell during the Fund's first weeks of operation in
reaction to earnings announcements and US stock market and monetary policy
stances. The volume of
May 31, 1999 3 Mercury Global Balanced Fund
<PAGE>
shares traded fell substantially as foreign investors became increasingly
disappointed at Japanese economic policies and the performance of its equity
market. Domestic pension buying activity was also subdued. There were no
significant policy announcements from Prime Minister Obuchi, although an
additional Parliament may be convened to debate measures such as employment.
The most prominent occurrence in Europe during May was the European Union's (EU)
decision to allow Italy to relax its budget deficit target from 2% of gross
domestic product (GDP) to 2.4% of GDP. This has raised concerns that the EU's
stability and growth pact, a cornerstone of European economic and monetary
union, may already be cracking. If other member countries followed Italy's
example, the euro, which reached an all-time low against the dollar, would be
further damaged. However, despite these near-term difficulties, we still remain
confident regarding the outlook for the single currency zone.
Portfolio Activities
Since inception (April 30, 1999) we began steadily making investments and by May
31, 1999 Mercury Master Global Balanced Portfolio was fully invested. Given
prevailing uncertainties in world financial markets, we adopted a neutral
position relative to the Fund's benchmark (which is comprised of the unmanaged
Morgan Stanley Capital International World Index and the Salomon Smith Barney
World Government Bond Index), in our balance between bonds and equities. This
translates into a 60% allocation for equities and a 40% allocation for
fixed-income securities as of May 31, 1999. Within the equity component of the
Portfolio, we adopted a neutral stance toward Western markets and marginally
underweighted Eastern markets. Approximately 32% of the Portfolio's assets were
invested in North America, 20% in Europe, 6% in Japan and 1.5% in Asia Pacific.
Our investments in North America focused on high-quality industry leaders with a
clear and differentiated competitive position and good earnings visibility. We
established a position in Walgreen Co., a leading drug retailer with superior
geographic location and a strong management record, which we expect to benefit
from secular growth in pharmacy sales. General Electric Company was purchased as
its management's long record of superior shareholder value creation and the
company's world leadership in most of its businesses mean that it's well
positioned to benefit from a pick up in global economic activity. We also
purchased AT&T Corp. where new management has embarked on major restructuring,
which has resulted in the company having leadership in the US cable industry and
being at the forefront of delivering high bandwidth digital connectivity to the
consumer.
The attractive secular long-term growth prospects of the European
telecommunications industry, given the growing penetration of cellular use, led
us to invest in companies such as Vodafone Group PLC, Mannesmann AG and Swisscom
AG. Similarly, we made investments in the technology sector through positions in
Nokia Oyj and Koninklijke (Royal) Philips Electronics NV, given the increasing
application of cellular and other information systems.
The prospects for further corporate activity with the European financials sector
led us to establish positions in Credit Suisse Group, Axa and Allianz AG. We
also gained exposure to companies with an emphasis on restructuring and an
increased focus on shareholder value such as Vivendi, Nestle SA and Siemens AG.
May 31, 1999 4 Mercury Global Balanced Fund
<PAGE>
Major purchases in Japan included Toyota Motor Corporation, Japan's largest
vehicle manufacturer, which is well placed to benefit from the nascent recovery
in Asian economies, and has demonstrated its commitment to enhancing efficiency.
We also bought Murata Manufacturing Co., Ltd., an electronic components company
and Nippon Telegraph and Telephone Corporation (NTT), the domestic national
telecommunications company.
Within the bond component of the Portfolio, we have been nearly fully invested
for the entire period. We established overweight duration positions in the
dollar bloc markets of the United States and Australia as we believed markets
were discounting too much bad news. Over a third of the Portfolio's bond
exposure was in the US market with investments being structured in the
anticipation of a flatter yield curve. Within Europe, we also adopted an
overweight duration stance as we saw the growth prospects in core Europe
remained poor. The Portfolio's holdings were primarily in Germany, France, the
Netherlands and Denmark. We established a neutral position in the United
Kingdom. We avoided the Japanese bond market as we felt the deteriorating fiscal
position would lead to an increasing supply of Japanese government bonds which
would be difficult to place at the low yield levels. The Portfolio's
fixed-income investments were predominantly government instruments with the
exception of a small position in US Government agencies.
Investment Outlook
As long as economic growth in Europe continues to lag the rest of the world,
pressure from the United States to restructure will intensify. The problems
which need to be addressed are structural not cyclical, particularly in Germany
which has the worst growth performance in the Eurozone. Consolidation in Europe
is continuing at an encouraging pace, with corporate transactions including
Olivetti SpA's agreed acquisition of Telecom Italia SpA.
We continue to believe that demographics, technology and an increase in merger
and acquisition activity will continue to drive equity market valuations around
the world. Therefore, the Portfolio holds major equity investment positions in
industries benefiting from these trends such as healthcare, financial services,
technology and a variety of potential European restructuring shares.
In Conclusion
We thank you for your investment in Mercury Global Balanced Fund, and we look
forward to serving your investment needs in the months and years ahead.
Sincerely,
/s/ Jeffrey Peek /s/ Gary Lowe
Jeffrey Peek Gary Lowe
President Portfolio Manager
July 16, 1999
May 31, 1999 5 Mercury Global Balanced 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" table assume
reinvestment of all dividends and capital gains distributions at net asset value
on the ex-dividend date. Investment return and principal value of shares will
fluctuate so that shares, when redeemed, may be worth more or less than their
original cost. Dividends paid to each class of shares will vary because of the
different levels of account maintenance, distribution and transfer agency fees
applicable to each class, which are deducted from the income available to be
paid to shareholders.
RECENT PERFORMANCE RESULTS*
- --------------------------------------------------------------------------------
Since Inception Since Inception
Total Return Total Return
Without With
Sales Charge Sales Charge
- --------------------------------------------------------------------------------
Class I -3.70% -8.76%
Class A -3.80 -8.85
Class B -3.80 -7.65
Class C -3.80 -4.76
* Sales charges to each class include maximum applicable sales charge as
detailed above in "About Fund Performance." Total investment returns are
based on changes in the Fund's net asset values for the period shown, and
assume reinvestment of all dividends and capital gains at net asset value
on the ex-dividend date. The Fund's inception date is 4/30/99.
May 31, 1999 6 Mercury Global Balanced Fund
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
As of May 31, 1999
- --------------------------------------------------------------------------------
MERCURY GLOBAL BALANCED FUND
================================================================================
<TABLE>
<S> <C>
Assets:
Investment in Mercury Master Global Balanced Portfolio, at value (identified
cost--$437,881,019) (Note 1a) $ 422,830,449
Prepaid registration fee and other assets (Note 1d) 268,000
-------------
Total assets 423,098,449
-------------
- ---------------------------------------------------------------------------------------------
Liabilities:
Payable to distributor (Note 2) 295,600
Payable to administrator (Note 2) 63,995
Accrued expenses 361,525
-------------
Total liabilities 721,120
-------------
- ---------------------------------------------------------------------------------------------
Net Assets:
Net assets $ 422,377,329
=============
- ---------------------------------------------------------------------------------------------
Net Assets Consist of:
Class I Shares of Common Stock, $0.0001 par value, 100,000,000
shares authorized $ 139
Class A Shares of Common Stock, $0.0001 par value, 100,000,000
shares authorized 433
Class B Shares of Common Stock, $0.0001 par value, 100,000,000
shares authorized 2,520
Class C Shares of Common Stock, $0.0001 par value, 100,000,000
shares authorized 1,299
Paid-in capital in excess of par 438,586,646
Undistributed investment income--net 906,415
Undistributed realized capital losses on investments and foreign currency
transactions from the Portfolio--net (2,069,553)
Unrealized depreciation on investments and foreign currency transactions from
the Portfolio--net (15,050,570)
-------------
Net assets $ 422,377,329
=============
- ---------------------------------------------------------------------------------------------
Net Asset Value:
Class I--Based on net assets of $13,357,522 and 1,387,712 shares
outstanding $ 9.63
=============
Class A--Based on net assets of $41,703,838 and 4,333,479 shares
outstanding $ 9.62
=============
Class B--Based on net assets of $242,369,109 and 25,199,994 shares
outstanding $ 9.62
=============
Class C--Based on net assets of $124,946,860 and 12,991,136 shares
outstanding $ 9.62
=============
- ---------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
May 31, 1999 7 Mercury Global Balanced Fund
<PAGE>
STATEMENT OF OPERATIONS
For the Period April 30, 1999+ to May 31, 1999
- --------------------------------------------------------------------------------
MERCURY GLOBAL BALANCED FUND
================================================================================
<TABLE>
<S> <C> <C>
Investment Income (Notes 1b & 1c):
Investment income allocated from the Portfolio (net of $75,330
foreign withholding tax) $ 1,592,438
Expenses allocated from the Portfolio (230,674)
------------
Net investment income from the Portfolio 1,361,764
------------
- -------------------------------------------------------------------------------------------
Expenses:
Account maintenance and distribution fees--Class B (Note 2) $ 188,648
Account maintenance and distribution fees--Class C (Note 2) 98,677
Administration fee (Note 2) 66,224
Transfer agent fees--Class B (Note 2) 29,777
Registration fees (Note 1d) 27,559
Transfer agent fees--Class C (Note 2) 15,779
Account maintenance fees--Class A (Note 2) 8,275
Transfer agent fees--Class A (Note 2) 4,787
Organization expenses 4,603
Printing and shareholder reports 4,521
Professional fees 3,374
Transfer agent fees--Class I (Note 2) 1,546
Accounting services (Note 2) 567
Other 1,012
------------
Total expenses 455,349
------------
Investment income--net 906,415
------------
- -------------------------------------------------------------------------------------------
Realized & Unrealized Loss from the Portfolio--Net:
Realized loss from the Portfolio on:
Investments--net (1,202,719)
Foreign currency transactions--net (866,834) (2,069,553)
------------
Unrealized depreciation on investments and foreign currency
transactions from the Portfolio--net (15,050,570)
------------
Net realized and unrealized loss on investments and foreign
currency transactions from the Portfolio (17,120,123)
------------
Net Decrease in Net Assets Resulting from Operations $(16,213,708)
============
- -------------------------------------------------------------------------------------------
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
May 31, 1999 8 Mercury Global Balanced Fund
<PAGE>
STATEMENT OF CHANGES
IN NET ASSETS
For the Period April 30, 1999+ to May 31, 1999
- --------------------------------------------------------------------------------
MERCURY GLOBAL BALANCED FUND
================================================================================
Increase (Decrease) in Net Assets:
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Operations:
Investment income--net $ 906,415
Realized loss on investments and foreign currency transactions from the
Portfolio--net (2,069,553)
Unrealized depreciation on investments and foreign currency transactions
from the Portfolio--net (15,050,570)
-------------
Net decrease in net assets resulting from operations (16,213,708)
-------------
- ----------------------------------------------------------------------------------------
Capital Share Transactions (Note 4):
Net increase in net assets derived from capital share transactions 438,491,037
-------------
- ----------------------------------------------------------------------------------------
Net Assets:
Total increase in net assets 422,277,329
Beginning of period 100,000
-------------
End of period* $ 422,377,329
-------------
- ----------------------------------------------------------------------------------------
* Undistributed investment income--net $ 906,415
=============
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
May 31, 1999 9 Mercury Global Balanced Fund
<PAGE>
FINANCIAL HIGHLIGHTS
MERCURY GLOBAL BALANCED FUND
================================================================================
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
For the Period April 30, 1999+ to May 31, 1999
---------------------------------------------------------------
Increase (Decrease) in Net Asset Value: Class I Class A Class B Class C
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 10.00 $ 10.00 $ 10.00 $ 10.00
---------------------------------------------------------------
Investment income--net .03 .03 .02 .02
Realized and unrealized loss on
investments and foreign currency
transactions from the Portfolio--net (.40) (.41) (.40) (.40)
---------------------------------------------------------------
Total from investment operations (.37) (.38) (.38) (.38)
---------------------------------------------------------------
Net asset value, end of period $ 9.63 $ 9.62 $ 9.62 $ 9.62
===============================================================
- ----------------------------------------------------------------------------------------------------------
Total Investment Return:**
Based on net asset value per share (3.70%)+++ (3.80%)+++ (3.80%)+++ (3.80%)+++
===============================================================
- ----------------------------------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses++ 1.17%* 1.42%* 2.18%* 2.18%*
---------------------------------------------------------------
Investment income--net 3.64%* 3.40%* 2.63%* 2.63%*
===============================================================
- ----------------------------------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 13,357 $ 41,704 $ 242,369 $ 124,947
===============================================================
- ----------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales loads.
+ Commencement of operations.
++ Includes the Fund's share of the Portfolio's allocated expenses.
+++ Aggregate total investment return.
See Notes to Financial Statements.
May 31, 1999 10 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MERCURY GLOBAL BALANCED FUND
================================================================================
1 Significant Accounting Policies:
Mercury Global Balanced Fund (the "Fund") is part of Mercury Asset
Management Funds, Inc. (the "Corporation"). The Fund is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The Fund seeks to achieve its investment objective by
investing all of its assets in the Mercury Master Global Balanced
Portfolio (the "Portfolio") of Mercury Asset Management Master Trust (the
"Trust"), which has the same investment objective as the Fund. The value
of the Fund's investment in the Portfolio reflects the Fund's
proportionate interest in the net assets of the Portfolio. The performance
of the Fund is directly affected by the performance of the Portfolio. The
financial statements of the Portfolio, including the Schedule of
Investments, are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements. Prior to commencement of
operations on April 30, 1999, the Fund had no operations other than those
relating to organizational matters and the issuance of 10,000 capital
shares of the Fund on April 21, 1999 to Mercury Asset Management
International Ltd. ("Mercury International") for $100,000. The Fund's
financial statements are prepared in accordance with generally accepted
accounting principles which may require the use of management accruals and
estimates. These unaudited financial statements reflect all adjustments
which are, in the opinion of management, necessary to a fair statement of
the results for the interim period presented. All such adjustments are of
a normal recurring nature. The Fund offers four classes of shares. Class I
and Class A Shares are sold with a front-end sales charge. Class B and
Class C Shares may be subject to a contingent deferred sales charge. All
classes of shares have identical voting, dividend, liquidation and other
rights and the same terms and conditions, except that Class A, Class B and
Class C Shares bear certain expenses related to the account maintenance of
such shares, and Class B and Class C Shares also bear certain expenses
related to the distribution of such shares. Each class has exclusive
voting rights with respect to matters relating to its account maintenance
and distribution expenditures (except that Class B Shares have certain
voting rights with respect to Class A distribution expenditures). The
following is a summary of significant accounting policies followed by the
Fund.
(a) Valuation of investments--Valuation of securities is discussed in Note
1a of the Portfolio's Notes to Financial Statements, which are included
elsewhere in this report.
(b) Income--The Fund's net investment income consists of the Fund's pro
rata share of the net investment income of the Portfolio, less all actual
and accrued expenses of the Fund determined in accordance with generally
accepted accounting principles.
(c) Income taxes--It is the Fund's policy to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies
and to distribute substantially all of its taxable income to shareholders.
Therefore, no Federal income tax
May 31, 1999 11 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
provision is required. Under the applicable foreign tax law, withholding
taxes may be imposed on interest, dividends and capital gains at various
rates.
(d) Prepaid registration fees--Prepaid registration fees are charged to
expense as the related shares are issued.
(e) Dividends and distributions--Dividends and distributions paid by the
Fund are recorded on the ex-dividend dates.
(f) Investment transactions--Investment transactions are accounted for on
a trade date basis.
2 Transactions with Affiliates:
The Corporation has entered into an Administration Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is Princeton
Services, Inc. ("PSI"), a wholly-owned subsidiary of Merrill Lynch & Co.,
Inc. ("ML & Co."), which is the limited partner. The Fund pays a monthly
fee at an annual rate of 0.20% of the Fund's average daily net assets for
the performance of administrative services (other than investment advice
and related portfolio activities) necessary for the operation of the Fund.
The Corporation has also entered into a Distribution Agreement and
Distribution Plans with Mercury Funds Distributor ("MFD" or the
"Distributor"), a division of Princeton Funds Distributor, Inc. ("PFD"), a
wholly-owned subsidiary of Merrill Lynch Group, Inc. Pursuant to the
Distribution Plans adopted by the Corporation in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the
Distributor ongoing account maintenance and distribution fees. The fees
are accrued daily and paid monthly at annual rates based upon the average
daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
========================================================================
Class A 0.25% --
------------------------------------------------------------------------
Class B 0.25% 0.75%
------------------------------------------------------------------------
Class C 0.25% 0.75%
------------------------------------------------------------------------
Pursuant to a sub-agreement with the Distributor, Merrill Lynch, Pierce,
Fenner & Smith Incorporated ("MLPF&S"), a subsidiary of ML & Co., and
selected dealers also provide account maintenance and distribution
services to the Fund. The ongo ing account maintenance fee compensates the
Distributor, MLPF&S and selected dealers for providing account maintenance
services to Class A, Class B and Class C shareholders. The ongoing
distribution fee compensates the Distributor, MLPF&S and selected dealers
for providing shareholder and distribution-related services to Class B and
Class C shareholders.
May 31, 1999 12 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
For the period April 30, 1999 to May 31, 1999, MFD earned underwriting
discounts and MLPF&S earned dealer concessions on sales of the Fund's
Class A Shares as follows:
MFD MLPF&S
==========================================================================
Class A $4,719 $1,881,319
--------------------------------------------------------------------------
For the period April 30, 1999 to May 31, 1999, MLPF&S received contingent
deferred sales charges of $10,392 and $1,361 relating to transactions in
Class B and Class C Shares, respectively.
Financial Data Services, Inc. ("FDS"), an indirect wholly-owned subsidiary
of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or directors of the Corporation are officers and/or
directors or trustees of the Trust, Mercury International, FAM, PSI, PFD,
FDS, and/or ML & Co.
3 Investments:
Increases and decreases in the Fund's investment in the Portfolio for the
period April 30, 1999 to May 31, 1999 were $438,591,037 and $2,229,
respectively.
4 Capital Share Transactions:
Net increase in net assets derived from capital share transactions was
$438,491,037 for the period April 30, 1999 to May 31, 1999.
Transactions in capital shares for each class were as follows:
Class I Shares for the Period April 30, 1999+
to May 31, 1999 Shares Dollar Amount
--------------------------------------------------------------------------
Shares sold 1,459,394 $14,570,689
Shares redeemed (74,182) (726,073)
----------------------------------
Net increase 1,385,212 $13,844,616
==================================
--------------------------------------------------------------------------
+ Prior to April 30, 1999 (commencement of operations), the Fund issued
2,500 shares to Mercury International for $25,000.
May 31, 1999 13 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONCLUDED)
Class A Shares for the Period April 30, 1999+
to May 31, 1999 Shares Dollar Amount
--------------------------------------------------------------------------
Shares sold 4,407,278 $44,032,639
Shares redeemed (76,299) (753,195)
----------------------------------
Net increase 4,330,979 $43,279,444
==================================
--------------------------------------------------------------------------
+ Prior to April 30, 1999 (commencement of operations), the Fund issued
2,500 shares to Mercury International for $25,000.
Class B Shares for the Period April 30, 1999+
to May 31, 1999 Shares Dollar Amount
--------------------------------------------------------------------------
Shares sold 25,510,649 $254,687,176
Shares redeemed (313,155) (3,081,190)
----------------------------------
Net increase 25,197,494 $251,605,986
==================================
--------------------------------------------------------------------------
+ Prior to April 30, 1999 (commencement of operations), the Fund issued
2,500 shares to Mercury International for $25,000.
Class C Shares for the Period April 30, 1999+
to May 31, 1999 Shares Dollar Amount
--------------------------------------------------------------------------
Shares sold 13,145,967 $131,313,819
Shares redeemed (157,331) (1,552,828)
----------------------------------
Net increase 12,988,636 $129,760,991
==================================
--------------------------------------------------------------------------
+ Prior to April 30, 1999 (commencement of operations), the Fund issued
2,500 shares to Mercury International for $25,000.
May 31, 1999 14 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
In US Dollars
---------------------------------------
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
EUROPE
============================================================================================================
Belgium
<S> <C> <C> <C> <C> <C>
Insurance 24,704 Fortis AG 'B' $ 840,283 $ 793,832 0.2%
- ------------------------------------------------------------------------------------------------------------
Utilities-- 2,583 Electrabel SA 826,768 796,004 0.2
Electric & Gas
- ------------------------------------------------------------------------------------------------------------
Total Investments in Belgium 1,667,051 1,589,836 0.4
- ------------------------------------------------------------------------------------------------------------
Denmark
Foreign DKR47,600,000 Kingdom of Denmark, 6%
Government due 11/15/2009 7,811,178 7,485,399 1.8
Obligations
- ------------------------------------------------------------------------------------------------------------
Total Investments in Denmark 7,811,178 7,485,399 1.8
- ------------------------------------------------------------------------------------------------------------
Finland
Electrical & 49,097 Nokia Oyj 3,792,148 3,499,094 0.8
Electronics
- ------------------------------------------------------------------------------------------------------------
Total Investments in Finland 3,792,148 3,499,094 0.8
- ------------------------------------------------------------------------------------------------------------
France
Banking 9,998 Compagnie Financiere de
Paribas (CFP) 1,074,266 1,086,583 0.3
7,387 Credit Commercial de France 798,389 814,398 0.2
5,929 Societe Generale 'A' 1,072,028 1,079,309 0.2
---------------------------------------
2,944,683 2,980,290 0.7
- ------------------------------------------------------------------------------------------------------------
Business/ 25,364 Vivendi 1,953,547 1,881,882 0.4
Public 24,444 Vivendi (Rights) (a) 0 25,289 0.0
Services ---------------------------------------
1,953,547 1,907,171 0.4
- ------------------------------------------------------------------------------------------------------------
Energy 2,965 Elf Aquitaine SA 466,628 430,061 0.1
Sources 8,674 +Total SA 'B' 1,181,644 1,055,994 0.2
---------------------------------------
1,648,272 1,486,055 0.3
- ------------------------------------------------------------------------------------------------------------
Foreign (euro)10,450,000 French Btan, 4.50%
Government due 7/12/2002 11,584,491 11,371,038 2.7
Obligations (euro) 6,800,000 French OAT, 5.25%
due 4/25/2008 7,952,818 7,684,499 1.8
---------------------------------------
19,537,309 19,055,537 4.5
- ------------------------------------------------------------------------------------------------------------
Insurance 13,285 Axa 1,724,762 1,534,052 0.4
- ------------------------------------------------------------------------------------------------------------
Leisure/ 6,039 Accor SA 1,586,938 1,484,290 0.4
Tourism
- ------------------------------------------------------------------------------------------------------------
Merchandising 9,881 Pinault-Printemps-Redoute SA 1,626,250 1,686,178 0.4
- ------------------------------------------------------------------------------------------------------------
Total Investments in France 31,021,761 30,133,573 7.1
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 15 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
---------------------------------------
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
EUROPE (continued)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Germany
Automobiles 4,282 DaimlerChrysler AG $ 422,034 $ 370,281 0.1%
17,567 Volkswagen AG (Preferred) 742,844 624,156 0.1
----------------------------------------
1,164,878 994,437 0.2
- ------------------------------------------------------------------------------------------------------------
Banking 13,395 Deutsche Bank AG 776,168 699,889 0.2
19,214 HypoVereinsbank 1,258,248 1,040,073 0.2
----------------------------------------
2,034,416 1,739,962 0.4
- ------------------------------------------------------------------------------------------------------------
Chemicals 10,101 Bayer AG 426,774 393,722 0.1
- ------------------------------------------------------------------------------------------------------------
Electrical & 35,025 Siemens AG 2,603,342 2,360,773 0.6
Electronics
- ------------------------------------------------------------------------------------------------------------
For- (euro)10,500,000 Bundesobligation, 5%
eign due 8/20/2001 11,652,190 11,471,529 2.7
Govern- Bundesrepublic Deutschland:
ment (euro) 9,300,000 6.75% due 7/15/2004 11,488,890 11,206,791 2.7
Obliga- (euro) 9,000,000 6.875% due 5/12/2005 11,304,982 11,011,280 2.6
tions (euro) 5,800,000 6.50% due 7/04/2027 7,683,222 7,290,898 1.7
----------------------------------------
42,129,284 40,980,498 9.7
- ------------------------------------------------------------------------------------------------------------
Insurance 5,160 Allianz AG (Registered Shares) 1,645,158 1,412,756 0.3
- ------------------------------------------------------------------------------------------------------------
Telecom- 15,800 Mannesmann AG 2,092,451 2,162,941 0.5
munications
- ------------------------------------------------------------------------------------------------------------
Transpor- 36,342 Deutsche Lufthansa AG
tation--Airlines (Registered Shares) 845,293 782,334 0.2
- ------------------------------------------------------------------------------------------------------------
Total Investments in
Germany 52,941,596 50,827,423 12.0
- ------------------------------------------------------------------------------------------------------------
Italy
Banking 274,162 Unicredito Italiano SpA 1,404,721 1,292,112 0.3
- ------------------------------------------------------------------------------------------------------------
Broad- 384,781 Seat Pagine Gialle SpA 518,447 524,735 0.1
casting &
Publishing
- ------------------------------------------------------------------------------------------------------------
Business/ (euro)753,948 Tecnost International NV,
Public 0% due 6/23/2004 (b) 805,062 794,178 0.2
Services 155,989 Tecnost SpA 362,634 363,509 0.1
----------------------------------------
1,167,696 1,157,687 0.3
- ------------------------------------------------------------------------------------------------------------
Energy 133,952 ENI SpA 881,054 838,479 0.2
Sources
- ------------------------------------------------------------------------------------------------------------
Telecom- 214,433 Telecom Italia Mobile
munications (TIM) SpA 1,302,665 1,263,825 0.3
- ------------------------------------------------------------------------------------------------------------
Total Investments in Italy 5,274,583 5,076,838 1.2
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 16 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
----------------------------------------
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
EUROPE (continued)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Netherlands
Broadcasting 74,442 Elsevier NV $ 1,115,549 $ 945,171 0.3%
& Publishing 22,115 Wolters Kluwer NV 'A' 972,591 890,897 0.2
----------------------------------------
2,088,140 1,836,068 0.5
- ------------------------------------------------------------------------------------------------------------
Chemicals 19,214 Akzo Nobel NV 884,369 799,129 0.2
- ------------------------------------------------------------------------------------------------------------
Electrical & 18,775 +Koninklijke (Royal) Philips
Electronics Electronics NV 1,643,669 1,613,735 0.4
- ------------------------------------------------------------------------------------------------------------
Energy 30,894 Royal Dutch Petroleum
Sources Company 1,805,073 1,723,978 0.4
- ------------------------------------------------------------------------------------------------------------
Food & 27,449 Unilever NV 'A' 2,061,261 1,828,618 0.4
Household
Products
- ------------------------------------------------------------------------------------------------------------
For- (euro)7,600,000 Netherlands Government
eign Bonds, 3.75% due
Government 7/15/2009 7,903,073 7,588,581 1.8
Obligations
- ------------------------------------------------------------------------------------------------------------
Insurance 34,257 ING Groep NV 2,085,872 1,834,676 0.4
- ------------------------------------------------------------------------------------------------------------
Total Investments in the
Netherlands 18,471,457 17,224,785 4.1
- ------------------------------------------------------------------------------------------------------------
Spain
Banking 47,322 Banco Santander Central
Hispano, SA 1,031,012 989,030 0.2
- ------------------------------------------------------------------------------------------------------------
Telecom- 24,200 +Telefonica, SA 1,143,277 1,162,788 0.3
munications
- ------------------------------------------------------------------------------------------------------------
Total Investments in Spain 2,174,289 2,151,818 0.5
- ------------------------------------------------------------------------------------------------------------
Sweden
Appliances & 54,070 Electrolux AB 'B' 1,107,397 1,049,872 0.2
Household
Durables
- ------------------------------------------------------------------------------------------------------------
Electrical & 15,811 Telefonaktiebolaget
Electronics LM Ericsson 'B' 420,374 423,163 0.1
- ------------------------------------------------------------------------------------------------------------
Total Investments in Sweden 1,527,771 1,473,035 0.3
- ------------------------------------------------------------------------------------------------------------
Switzerland
Banking 7,356 Credit Suisse Group
(Registered Shares) 1,455,954 1,281,617 0.3
5,490 UBS AG (Registered Shares) 1,867,372 1,595,385 0.4
----------------------------------------
3,323,326 2,877,002 0.7
- ------------------------------------------------------------------------------------------------------------
Business/ 1,958 Adecco SA (Registered
Public Services Shares) 989,819 1,028,561 0.2
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 17 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
----------------------------------------
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
EUROPE (continued)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Switzerland (concluded)
Food & 601 Nestle SA
Household (Registered Shares) $ 1,116,745 $ 1,084,645 0.3%
Products
- ------------------------------------------------------------------------------------------------------------
Health & 864 Novartis AG
Personal Care (Registered Shares) 1,275,279 1,258,793 0.3
114 Roche Holding AG 1,341,844 1,211,203 0.3
----------------------------------------
2,617,123 2,469,996 0.6
- ------------------------------------------------------------------------------------------------------------
Telecom- 3,572 Swisscom AG (Registered
munications Shares) 1,293,645 1,291,650 0.3
- ------------------------------------------------------------------------------------------------------------
Total Investments in
Switzerland 9,340,658 8,751,854 2.1
- ------------------------------------------------------------------------------------------------------------
United Kingdom
Aerospace & 188,849 British Aerospace PLC 1,417,555 1,245,070 0.3
Military
Technology
- ------------------------------------------------------------------------------------------------------------
Banking 45,126 Barclays PLC 1,442,806 1,367,801 0.3
11,528 HSBC Holdings PLC 431,535 384,863 0.1
177,870 Lloyds TSB Group PLC 2,860,670 2,349,645 0.6
----------------------------------------
4,735,011 4,102,309 1.0
- ------------------------------------------------------------------------------------------------------------
Beverages & 137,899 British American Tobacco PLC 1,199,493 1,253,062 0.3
Tobacco 67,415 Diageo PLC 783,403 708,658 0.2
----------------------------------------
1,982,896 1,961,720 0.5
- ------------------------------------------------------------------------------------------------------------
Energy 139,441 BP Amoco PLC 2,654,696 2,493,959 0.6
Sources
- ------------------------------------------------------------------------------------------------------------
For- (pound)6,250,000 United Kingdom Gilt, 7.75%
eign due 9/08/2006 11,891,862 11,583,761 2.7
Government
Obligations
- ------------------------------------------------------------------------------------------------------------
Health & 25,363 AstraZeneca Group PLC 997,651 1,007,565 0.2
Personal 85,421 Glaxo Wellcome PLC 2,541,227 2,396,317 0.6
Care 107,601 SmithKline Beecham PLC 1,425,218 1,402,446 0.3
----------------------------------------
4,964,096 4,806,328 1.1
- ------------------------------------------------------------------------------------------------------------
Insurance 86,300 Allied Zurich PLC 1,196,269 1,099,941 0.3
73,328 CGU PLC 1,164,306 1,070,805 0.2
----------------------------------------
2,360,575 2,170,746 0.5
- ------------------------------------------------------------------------------------------------------------
Merchan- 44,906 Dixons Group PLC 957,800 806,038 0.2
dising 28,877 Kingfisher PLC 431,898 362,736 0.1
----------------------------------------
1,389,698 1,168,774 0.3
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 18 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
----------------------------------------
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
EUROPE (concluded)
============================================================================================================
<S> <C> <C> <C> <C> <C>
United Kingdom (concluded)
Telecom- 103,400 British Telecommunications
munications PLC $ 1,741,400 $ 1,723,522 0.4%
93,548 Cable & Wireless PLC 1,329,860 1,153,376 0.3
104,846 Vodafone Group PLC 1,970,709 1,996,086 0.5
----------------------------------------
5,041,969 4,872,984 1.2
- ------------------------------------------------------------------------------------------------------------
Transpor- 115,835 The Peninsular and Oriental
tation-- Steam Navigation Company 1,702,187 1,691,532 0.4
Shipping
- ------------------------------------------------------------------------------------------------------------
Utilities-- 221,678 BG PLC 1,263,053 1,218,369 0.3
Electric & 87,837 National Grid Group PLC 616,074 596,333 0.1
Gas ----------------------------------------
1,879,127 1,814,702 0.4
- ------------------------------------------------------------------------------------------------------------
Total Investments in the
United Kingdom 40,019,672 37,911,885 9.0
- ------------------------------------------------------------------------------------------------------------
Total Investments in Europe 174,042,164 166,125,540 39.3
- ------------------------------------------------------------------------------------------------------------
NORTH AMERICA
============================================================================================================
Canada
For- C$6,100,000 Canada Government Bond,
eign 7% due 12/01/2006 4,693,146 4,540,881 1.1
Government
Obligations
- ------------------------------------------------------------------------------------------------------------
Total Investments in Canada 4,693,146 4,540,881 1.1
- ------------------------------------------------------------------------------------------------------------
United States
Aerospace & 29,900 The Boeing Company 1,336,804 1,263,275 0.3
Military 65,800 United Technologies
Technology Corporation 4,927,405 4,083,713 1.0
----------------------------------------
6,264,209 5,346,988 1.3
- ------------------------------------------------------------------------------------------------------------
Automobiles 25,300 Ford Motor Company 1,651,913 1,443,681 0.3
12,480 Safra Republic Holdings 834,706 826,800 0.2
----------------------------------------
2,486,619 2,270,481 0.5
- ------------------------------------------------------------------------------------------------------------
Banking 23,200 Bank One Corporation 1,402,158 1,312,250 0.3
43,200 Fleet Financial Group, Inc. 1,898,904 1,776,600 0.4
72,000 Mellon Bank Corporation 2,704,252 2,569,500 0.6
48,800 U.S. Bancorp 1,810,534 1,586,000 0.4
----------------------------------------
7,815,848 7,244,350 1.7
- ------------------------------------------------------------------------------------------------------------
Beverages & 64,900 PepsiCo, Inc. 2,405,129 2,324,231 0.5
Tobacco
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 19 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
----------------------------------------
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
NORTH AMERICA (continued)
============================================================================================================
<S> <C> <C> <C> <C> <C>
United States (continued)
Business/ 84,000 +Microsoft Corporation $ 6,984,479 $ 6,777,750 1.6%
Public Services
- ------------------------------------------------------------------------------------------------------------
Data 26,600 +Cisco Systems, Inc. 3,028,225 2,897,738 0.7
Processing & 25,700 +EMC Corporation 2,833,045 2,560,363 0.6
Reproduction 18,800 International Business
Machines Corporation 1,995,811 2,186,675 0.5
4,500 +Yahoo! Inc. 795,496 665,438 0.2
----------------------------------------
8,652,577 8,310,214 2.0
- ------------------------------------------------------------------------------------------------------------
Electrical & 58,300 General Electric Company 6,357,683 5,928,381 1.4
Electronics
- ------------------------------------------------------------------------------------------------------------
Electronic 17,100 +America Online, Inc. 2,480,784 2,041,313 0.5
Components/ 59,400 +Dell Computer Corporation 2,507,765 2,041,875 0.5
Instruments 34,800 +Nextel Communications, Inc.
(Class A) 1,345,093 1,281,075 0.3
30,300 Texas Instruments
Incorporated 3,196,313 3,314,063 0.8
5,700 +Uniphase Corporation 785,348 765,581 0.1
----------------------------------------
10,315,303 9,443,907 2.2
- ------------------------------------------------------------------------------------------------------------
Energy 48,100 Exxon Corporation 4,016,521 3,841,988 0.9
Sources 43,700 Mobil Corporation 4,600,682 4,424,625 1.0
29,800 Texaco Inc. 1,906,172 1,951,900 0.5
----------------------------------------
10,523,375 10,218,513 2.4
- ------------------------------------------------------------------------------------------------------------
Financial 27,500 American Express Company 3,674,793 3,332,656 0.8
Services 38,100 Citigroup Inc. 2,898,895 2,524,125 0.6
5,900 +The Goldman Sachs
Group, Inc. 408,043 400,831 0.1
13,600 Providian Financial
Corporation 1,737,069 1,304,750 0.3
----------------------------------------
8,718,800 7,562,362 1.8
- ------------------------------------------------------------------------------------------------------------
Food & 100,500 The Dial Corporation 3,473,042 3,140,625 0.8
Household 14,600 The Procter & Gamble
Products Company 1,370,861 1,363,275 0.3
----------------------------------------
4,843,903 4,503,900 1.1
- ------------------------------------------------------------------------------------------------------------
Health & 45,000 Bristol-Myers Squibb Company 2,890,076 3,088,125 0.7
Personal 12,900 The Estee Lauder Companies
Care Inc. (Class A) 1,223,131 1,177,125 0.3
21,200 Johnson & Johnson 2,032,999 1,963,650 0.5
34,400 Merck & Co., Inc. 2,442,991 2,322,000 0.6
21,700 Pfizer Inc. 2,520,115 2,321,900 0.5
9,500 Schering-Plough Corporation 460,052 428,094 0.1
28,600 Tyco International Ltd. 2,368,913 2,498,925 0.6
----------------------------------------
13,938,277 13,799,819 3.3
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 20 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
----------------------------------------
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
NORTH AMERICA (concluded)
============================================================================================================
<S> <C> <C> <C> <C> <C>
United States (concluded)
Insurance 33,300 The Allstate Corporation $ 1,234,301 $ 1,213,369 0.3%
31,900 American International
Group, Inc. 3,766,673 3,646,569 0.8
----------------------------------------
5,000,974 4,859,938 1.1
- ------------------------------------------------------------------------------------------------------------
Machinery & 43,200 Case Corporation 1,534,608 2,030,400 0.5
Engineering
- ------------------------------------------------------------------------------------------------------------
Merchandising 33,000 The Home Depot, Inc. 1,983,375 1,876,875 0.4
28,300 +Kohl's Corporation 1,914,922 1,929,706 0.5
47,800 +The Kroger Co. 2,618,721 2,799,288 0.7
29,000 Lowe's Companies, Inc. 1,551,195 1,506,188 0.3
96,200 Wal-Mart Stores, Inc. 4,438,088 4,100,525 1.0
171,900 Walgreen Co. 4,678,536 3,996,675 0.9
----------------------------------------
17,184,837 16,209,257 3.8
- ------------------------------------------------------------------------------------------------------------
Telecom- 49,900 AT&T Corp. 2,668,285 2,769,450 0.7
munications 27,000 +Airtouch Communications, Inc. 2,577,998 2,713,500 0.7
32,500 Bell Atlantic Corporation 1,896,531 1,779,375 0.4
40,100 +MCI WorldCom Inc. 3,380,043 3,461,131 0.8
24,300 SBC Communications Inc. 1,368,247 1,242,338 0.3
30,800 Sprint Corp. (FON Group) 3,225,710 3,472,700 0.8
29,200 +Sprint Corp. (PCS Group) 1,282,332 1,314,000 0.3
----------------------------------------
16,399,146 16,752,494 4.0
- ------------------------------------------------------------------------------------------------------------
US US$8,000,000 Federal National Mortgage
Govern- Association, 5.25%
ment due 1/15/2009 7,499,600 7,432,480 1.8
Agency
Obligations
- ------------------------------------------------------------------------------------------------------------
US US Treasury Bonds:
Govern- US$5,900,000 11.625% due 11/15/2004 7,681,062 7,493,944 1.8
ment US$6,100,000 10.75% due 8/15/2005 7,855,656 7,651,657 1.8
Obliga- US$7,300,000 11.75% due 11/15/2014 10,855,328 10,513,168 2.5
tions US$8,100,000 8% due 11/15/2021 10,190,187 9,940,239 2.3
US Treasury Notes:
US$4,750,000 5% due 2/28/2001 4,747,773 4,718,080 1.1
US$8,400,000 5% due 4/30/2001 8,349,469 8,340,948 2.0
----------------------------------------
49,679,475 48,658,036 11.5
- ------------------------------------------------------------------------------------------------------------
Total Investments in the
United States 186,604,842 179,673,501 42.5
- ------------------------------------------------------------------------------------------------------------
Total Investments in
North America 191,297,988 184,214,382 43.6
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 21 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
----------------------------------------
Shares Held/ Value Percent of
Industries Face Amount Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
PACIFIC BASIN/ASIA
============================================================================================================
<S> <C> <C> <C> <C> <C>
Australia
Banking 89,000 Colonial Limited $ 334,509 $ 318,484 0.1%
34,000 Commonwealth Bank of
Australia 605,364 547,840 0.1
----------------------------------------
939,873 866,324 0.2
- ------------------------------------------------------------------------------------------------------------
Beverages & 113,000 Foster's Brewing Group
Tobacco Limited 329,042 320,833 0.1
- ------------------------------------------------------------------------------------------------------------
Business/ 11,000 Brambles Industries Limited 312,358 294,109 0.1
Public Services
- ------------------------------------------------------------------------------------------------------------
Electrical & 119,000 Telstra Corporation Limited 640,546 590,102 0.1
Electronics
- ------------------------------------------------------------------------------------------------------------
For- A$10,400,000 Australian Government Bonds,
eign 7.50% due 9/15/2009 7,965,084 7,553,990 1.8
Government
Obligations
- ------------------------------------------------------------------------------------------------------------
Merchan- 44,000 Coles Myer Limited 233,900 230,653 0.1
dising
- ------------------------------------------------------------------------------------------------------------
Metals/ 31,000 Rio Tinto Limited 531,817 436,024 0.1
Non-Ferrous
- ------------------------------------------------------------------------------------------------------------
Recreation 29,000 TABCORP Holdings Limited 232,406 202,239 0.0
& Other
Consumer
Goods
- ------------------------------------------------------------------------------------------------------------
Total Investments in
Australia 11,185,026 10,494,274 2.5
- ------------------------------------------------------------------------------------------------------------
Hong Kong
Industrial 74,000 Hutchison Whampoa Limited 680,379 615,553 0.2
Components
- ------------------------------------------------------------------------------------------------------------
Transpor- 309,000 Cathay Pacific Airways 512,618 470,235 0.1
tation--Airlines
- ------------------------------------------------------------------------------------------------------------
Utilities-- 418,000 Hong Kong and China Gas
Electric & Gas Company Ltd. 612,028 592,984 0.1
- ------------------------------------------------------------------------------------------------------------
Total Investments in
Hong Kong 1,805,025 1,678,772 0.4
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 22 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
----------------------------------------
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
PACIFIC BASIN/ASIA (continued)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Japan
Appliances & 13,000 Sony Corporation $ 1,208,630 $ 1,223,529 0.3%
Household
Durables
- ------------------------------------------------------------------------------------------------------------
Automobiles 52,000 Toyota Motor Corporation 1,525,577 1,421,707 0.3
- ------------------------------------------------------------------------------------------------------------
Banking 59,000 The Bank of
Tokyo-Mitsubishi, Ltd. 889,959 791,881 0.2
77,000 The Sumitomo Bank, Ltd. 1,076,843 933,314 0.2
----------------------------------------
1,966,802 1,725,195 0.4
- ------------------------------------------------------------------------------------------------------------
Beverages & 73 Japan Tobacco, Inc. 764,784 731,814 0.2
Tobacco
- ------------------------------------------------------------------------------------------------------------
Chemicals 157,000 Asahi Chemical Industry
Co., Ltd. 954,720 853,289 0.2
- ------------------------------------------------------------------------------------------------------------
Data 81,000 Fujitsu Limited 1,391,219 1,355,592 0.3
Processing &
Reproduction
- ------------------------------------------------------------------------------------------------------------
Electrical & 80 NTT Data Corporation 624,835 532,891 0.1
Electronics
- ------------------------------------------------------------------------------------------------------------
Electronic 19,000 Murata Manufacturing
Components/ Co., Ltd. 1,114,025 1,049,959 0.3
Instruments
- ------------------------------------------------------------------------------------------------------------
Financial 80,000 The Nomura Securities
Services Co., Ltd. 870,081 799,337 0.2
- ------------------------------------------------------------------------------------------------------------
Food & 45,000 Kao Corporation 1,118,143 1,237,780 0.3
Household
Products
- ------------------------------------------------------------------------------------------------------------
Health & 29,000 Takeda Chemical Industries 1,303,838 1,290,224 0.3
Personal Care
- ------------------------------------------------------------------------------------------------------------
Industrial 37,000 Bridgestone Corp. 988,604 971,748 0.2
Components
- ------------------------------------------------------------------------------------------------------------
Machinery & 31,000 Komori Corporation 563,229 530,365 0.1
Engineering 247,000 Sumitomo Heavy
Industries, Ltd. 595,398 572,991 0.2
----------------------------------------
1,158,627 1,103,356 0.3
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 23 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
----------------------------------------
Shares Value Percent of
Industries Held Investments Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
PACIFIC BASIN/ASIA (concluded)
============================================================================================================
<S> <C> <C> <C> <C> <C>
Japan (concluded)
Merchan- 18,000 Tokyo Electron Limited $ 1,008,491 $ 994,698 0.2%
dising
- ------------------------------------------------------------------------------------------------------------
Metals-- 441,000 Nippon Steel Corporation 1,030,465 928,036 0.2
Steel
- ------------------------------------------------------------------------------------------------------------
Real Estate 96,000 Mitsubishi Estate Company,
Limited 1,002,907 914,664 0.2
- ------------------------------------------------------------------------------------------------------------
Telecom- 21 NTT Mobile Communication
munications Network, Inc. 1,246,606 1,150,041 0.3
176 Nippon Telegraph &
Telephone Corporation (NTT) 1,903,589 1,720,630 0.4
----------------------------------------
3,150,195 2,870,671 0.7
- ------------------------------------------------------------------------------------------------------------
Textiles & 197,000 Toray Industries, Inc. 987,865 958,070 0.2
Apparel 9,300 World Co., Ltd. 531,143 564,780 0.2
----------------------------------------
1,519,008 1,522,850 0.4
- ------------------------------------------------------------------------------------------------------------
Utilities-- 35,000 Tokyo Electric Power 764,908 764,085 0.2
Electric & Gas
- ------------------------------------------------------------------------------------------------------------
Total Investments in Japan 23,465,859 22,291,425 5.3
- ------------------------------------------------------------------------------------------------------------
Singapore
Broad- 28,000 Singapore Press Holdings Ltd. 406,033 383,184 0.1
casting &
Publishing
- ------------------------------------------------------------------------------------------------------------
Transpor- 29,000 Singapore Airlines Ltd.
tation--Airlines 'Foreign' 275,284 258,974 0.0
- ------------------------------------------------------------------------------------------------------------
Total Investments in Singapore 681,317 642,158 0.1
- ------------------------------------------------------------------------------------------------------------
Total Investments in the
Pacific Basin/Asia 37,137,227 35,106,629 8.3
- ------------------------------------------------------------------------------------------------------------
</TABLE>
May 31, 1999 24 Mercury Global Balanced Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONCLUDED)
<TABLE>
<CAPTION>
In US Dollars
----------------------------------------
Face Short-Term Value Percent of
Amount Securities Cost (Note 1a) Net Assets
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commercial US$10,000,000 General Electric
Paper* Capital Corp., 4.93%
due 6/01/1999 $ 9,995,892 $ 9,995,892 2.4%
9,721,000 General Motors
Acceptance Corp.,
4.94% due 6/01/1999 9,716,998 9,716,998 2.3
- ------------------------------------------------------------------------------------------------------------
Total Investments in
Commercial Paper 19,712,890 19,712,890 4.7
- ------------------------------------------------------------------------------------------------------------
US Government US Treasury Bills:
Obligations* 4,243,000 4.37% due
6/10/1999 4,236,798 4,236,798 1.0
1,920,000 4.41% due
6/24/1999 1,912,866 1,912,866 0.4
1,260,000 4.255% due
7/01/1999 1,255,085 1,255,085 0.3
- ------------------------------------------------------------------------------------------------------------
Total Investments in
US Government
Obligations 7,404,749 7,404,749 1.7
========================================
- ------------------------------------------------------------------------------------------------------------
Total Investments in
Short-Term Securities 27,117,639 27,117,639 6.4
========================================
- ------------------------------------------------------------------------------------------------------------
Total Investments $429,595,018 412,564,190 97.6
============
Unrealized Appreciation on
Forward Foreign Exchange Contracts** 2,012,835 0.5
Other Assets Less Liabilities 8,253,520 1.9
-----------------------
Net Assets $422,830,545 100.0%
=======================
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(a) The rights may be exercised until 6/07/1999.
(b) As of May 31, 1999, the coupon rate has not been determined.
+ Non-income producing security.
* Commercial Paper and certain US Government Obligations are traded on a
discount basis; the interest rates shown reflect the discount rates paid
at the time of purchase by the Portfolio.
** Forward foreign exchange contracts as of May 31, 1999 were as follows:
- -------------------------------------------------------------------------------
Unrealized
Foreign Expiration Depreciation
Currency Purchased Date (Note 1b)
- --------------------------------------------------------------------------------
(euro) 848,000 July 1999 $ (18,075)
- -------------------------------------------------------------------------------
(US$ Commitment--$907,614) $ (18,075)
----------
- -------------------------------------------------------------------------------
Unrealized
Foreign Expiration Appreciation
Currency Sold Date (Note 1b)
- -------------------------------------------------------------------------------
A$ 11,960,000 July 1999 $ 63,029
C$ 6,950,000 July 1999 53,606
Dkr 55,900,000 July 1999 163,309
(euro) 67,650,000 July 1999 1,553,582
(pound) 7,350,000 July 1999 197,384
- -------------------------------------------------------------------------------
(US$ Commitment--$105,196,684) $2,030,910
----------
- -------------------------------------------------------------------------------
Total Unrealized Appreciation on
Forward Foreign Exchange
Contracts--Net $2,012,835
==========
- -------------------------------------------------------------------------------
See Notes to Financial Statements.
May 31, 1999 25 Mercury Global Balanced Fund
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
As of May 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
=============================================================================================
Assets:
<S> <C> <C>
Investments, at value (identified cost--$429,595,018) (Note 1a) $412,564,190
Unrealized appreciation on forward foreign exchange contracts (Note 1b) 2,012,835
Foreign cash (Note 1c) 2,157,587
Receivables:
Securities sold $ 5,555,537
Interest 3,111,580
Contributions 2,251,647
Dividends 513,033 11,431,797
-----------
Prepaid expenses and other assets 10,007
------------
Total assets 428,176,416
-----------
- ---------------------------------------------------------------------------------------------
Liabilities:
Payables:
Securities purchased 4,831,043
Withdrawals 303,167
Investment adviser (Note 2) 192,084 5,326,294
-----------
Accrued expenses and other liabilities 19,577
------------
Total liabilities 5,345,871
------------
- ---------------------------------------------------------------------------------------------
Net Assets:
Net assets $422,830,545
============
- ---------------------------------------------------------------------------------------------
Net Assets Consist of:
Partners' capital $437,881,119
Unrealized depreciation on investments and foreign currency
transactions--net (15,050,574)
------------
Net assets $422,830,545
============
- ---------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
May 31, 1999 26 Mercury Global Balanced Fund
<PAGE>
STATEMENT OF OPERATIONS
For the Period April 30, 1999+ to May 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
=============================================================================================
Investment Income (Notes 1d & 1e):
<S> <C> <C>
Interest and discount earned $ 1,023,914
Dividends (net of $75,330 foreign withholding tax) 568,524
--------------
Total income 1,592,438
--------------
- ---------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees (Note 2) $ 198,774
Custodian fees 18,916
Accounting services (Note 2) 6,878
Trustees' fees and expenses 3,013
Pricing fees 946
Organization expenses 796
Other 1,351
------------
Total expenses 230,674
--------------
Investment income--net 1,361,764
--------------
- ---------------------------------------------------------------------------------------------
Realized & Unrealized Gain (Loss) on Investments
& Foreign Currency Transactions--Net
(Notes 1b, 1c, 1e & 3):
Realized loss from:
Investments--net (1,202,719)
Foreign currency transactions--net (866,834) (2,069,553)
------------
Unrealized appreciation/depreciation on:
Investments--net (17,030,828)
Foreign currency transactions--net 1,980,254 (15,050,574)
-------------------------------
Net realized and unrealized loss on investments and foreign
currency transactions (17,120,127)
-------------
Net Decrease in Net Assets Resulting from Operations $ (15,758,363)
=============
- ---------------------------------------------------------------------------------------------
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
May 31, 1999 27 Mercury Global Balanced Fund
<PAGE>
STATEMENT OF CHANGES
IN NET ASSETS
For the Period April 30, 1999+ to May 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
=============================================================================================
Increase (Decrease) in Net Assets
- ---------------------------------------------------------------------------------------------
<S> <C>
Operations:
Investment income--net $ 1,361,764
Realized loss on investments and foreign currency transactions--net (2,069,553)
Unrealized depreciation on investments and foreign currency transactions--net (15,050,574)
-------------
Net decrease in net assets resulting from operations (15,758,363)
-------------
- ---------------------------------------------------------------------------------------------
Net Capital Contributions:
Increase in net assets derived from net capital contributions 438,488,808
-------------
- ---------------------------------------------------------------------------------------------
Net Assets:
Total increase in net assets 422,730,445
Beginning of period 100,100
-------------
End of period $ 422,830,545
=============
- ---------------------------------------------------------------------------------------------
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
May 31, 1999 28 Mercury Global Balanced Fund
<PAGE>
FINANCIAL HIGHLIGHTS
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
===============================================================================
The following ratios have been derived from information provided in the
financial statements.
For the Period
April 30, 1999+
to May 31, 1999
- -------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses .70%*
============
Investment income--net 4.11%*
============
- -------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 422,831
============
Portfolio turnover 12.82%
============
- -------------------------------------------------------------------------------
* Annualized.
+ Commencement of operations.
See Notes to Financial Statements.
May 31, 1999 29 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MERCURY MASTER GLOBAL BALANCED PORTFOLIO
================================================================================
1 Significant Accounting Policies:
Mercury Master Global Balanced Portfolio (the "Portfolio") is part of
Mercury Asset Management Master Trust (the "Trust"). The Trust is
registered under the Investment Company Act of 1940 and is organized as a
Delaware business trust. The Portfolio's financial statements are prepared
in accordance with generally accepted accounting principles which may
require the use of management accruals and estimates. These unaudited
financial statements reflect all adjustments which are, in the opinion of
management, necessary to a fair statement of the results for the interim
period presented. All such adjustments are of a normal recurring nature.
The following is a summary of significant accounting policies followed by
the Portfolio.
(a) Valuation of investments--Portfolio securities that are traded on
stock exchanges are valued at the last sale price as of the close of
business on the day the securities are being valued or, lacking any sales,
at the last available bid price for long positions and the last available
ask price for short positions. Securities traded in the over-the-counter
market are valued at the last available bid price prior to the time of
valuation. Securities traded both in the over-the-counter market and on a
stock exchange are valued according to the broadest and most
representative market. Short positions in securities traded in the
over-the-counter market are valued at the last available ask price prior
to the time of valuation. Options written or purchased are valued at the
last sale price in the case of exchange-traded options. In the case of
options traded in the over-the-counter market, valuation is the last asked
price (options written) or the last bid price (options purchased).
Short-term securities are valued at amortized cost, which approximates
market value. Other investments, including futures contracts and related
options, are stated at market value. Securities and assets for which
market quotations are not readily available are valued at fair market
value, as determined in good faith by or under the direction of the
Trust's Board of Trustees.
(b) Derivative financial instruments--The Portfolio may engage in various
portfolio investment strategies to seek to increase its return by hedging
its holdings against adverse movements in the equity, debt and currency
markets. Losses may arise due to changes in the value of the contract or
if the counterparty does not perform under the contract.
o Financial futures contracts--The Portfolio may purchase or sell
financial futures contracts and options on such futures contracts for the
purpose of hedging the market risk on existing securities or the intended
purchase of securities. Upon entering into a
May 31, 1999 30 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
contract, the Portfolio deposits and maintains as collateral such initial
margin as required by the exchange on which the transaction is effected.
Pursuant to the contract, the Portfolio agrees to receive from or pay to
the broker an amount of cash equal to the daily fluctuation in value of
the contract. Such receipts or payments are known as variation margin and
are recorded by the Portfolio as unrealized gains or losses. When the
contract is closed, the Portfolio records a realized gain or loss equal to
the difference between the value of the contract at the time it was opened
and the value at the time it was closed.
o Options--The Portfolio is authorized to purchase and write call and put
options. When the Portfolio writes an option, an amount equal to the
premium received by the Portfolio is reflected as an asset and an
equivalent liability. The amount of the liability is subsequently marked
to market to reflect the current market value of the option written. When
a security is purchased or sold through an exercise of an option, the
related premium paid (or received) is added to (or deducted from) the
basis of the security acquired or deducted from (or added to) the proceeds
of the security sold. When an option expires (or the Portfolio enters into
a closing transaction), the Portfolio realizes a gain or loss on the
option to the extent of the premiums received or paid (or a gain or loss
to the extent that the cost of the closing transaction exceeds the premium
paid or received).
Written and purchased options are non-income producing investments.
o Forward foreign exchange contracts--The Portfolio is authorized to enter
into forward foreign exchange contracts as a hedge against either specific
transactions or portfolio positions. Such contracts are not entered on the
Portfolios' records. However, the effect on operations is recorded from
the date the Portfolio enters into such contracts.
o Foreign currency options and futures--The Portfolio may also purchase or
sell listed or over-the-counter foreign currency options, foreign currency
futures and related options on foreign currency futures as a short or long
hedge against possible variations in foreign exchange rates. Such
transactions may be effected with respect to hedges on non-US
dollar-denominated securities owned by the Portfolio, sold by the
Portfolio but not yet delivered, or committed or anticipated to be
purchased by the Portfolio.
(c) Foreign currency transactions--Transactions denominated in foreign
currencies are recorded at the exchange rate prevailing when recognized.
Assets and liabilities denominated in foreign currencies are valued at the
exchange rate at the end of the period. Foreign currency transactions are
the result of settling (realized) or valuing (unrealized) assets or
liabilities expressed in foreign currencies into US dollars. Realized and
unrealized gains or losses from investments include the effects of foreign
exchange rates on investments.
May 31, 1999 31 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(d) Income taxes--The Portfolio is classified as a partnership for Federal
income tax purposes. As a partnership for Federal income tax purposes, the
Portfolio will not incur Federal income tax liability. Items of
partnership income, gain, loss and deduction will pass through to
investors as partners in the Portfolio. Therefore, no Federal income tax
provision is required. Under the applicable foreign tax law, withholding
taxes may be imposed on interest, dividends, and capital gains at various
rates.
(e) Security transactions and investment income--Security transactions are
accounted for on the date the securities are purchased or sold (the trade
dates). Dividend income is recorded on the ex-dividend dates. Dividends
from foreign securities where the ex-dividend date may have passed are
subsequently recorded when the Portfolio has determined the ex-dividend
date. Interest income (including amortization of discount) is recognized
on the accrual basis. Realized gains and losses on security transactions
are determined on the identified cost basis.
2 Investment Advisory Agreement and Transactions
with Affiliates:
The Trust has entered into an Investment Advisory Agreement with Mercury
Asset Management International Ltd. ("Mercury International"), an
affiliate of Fund Asset Management, L.P. ("FAM"). The general partner of
FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited
partner.
Mercury International is responsible for the management of the Funds'
investments and provides the necessary personnel, facilities, equipment
and certain other services necessary to the operations of the Portfolio.
For such services, the Portfolio pays a monthly fee at an annual rate of
0.60% of the average daily value of the Portfolio's net assets. The Trust
has entered into a Sub-Advisory Agreement with FAM with respect to the
Portfolio, pursuant to which FAM provides investment advisory services
with respect to the Portfolio's daily cash assets. Mercury International
has agreed to pay FAM a fee in an amount to be determined from time to
time by both parties but in no event in excess of the amount that Mercury
International actually receives for providing services to the Trust
pursuant to the Investment Advisory Agreement.
May 31, 1999 32 Mercury Global Balanced Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONCLUDED)
Accounting services are provided to the Portfolio by FAM at cost.
Certain officers and/or trustees of the Trust are officers and/or
directors of Mercury Asset Management Funds, Inc., Mercury International,
FAM, PSI, and/or ML & Co.
3 Investments:
Purchases and sales of investments, excluding short-term securities, for
the period April 30, 1999 to May 31, 1999 were $428,408,215 and
$24,703,913, respectively.
Net realized gains (losses) for the period April 30, 1999 to May 31, 1999
and net unrealized gains (losses) as of May 31, 1999 were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
-------------------------------------------------------------------------
Investments:
Long-term $ (1,203,026) $(17,030,828)
Short-term 307 --
------------------------------
Total investments (1,202,719) (17,030,828)
------------------------------
Currency transactions:
Forward foreign exchange contracts -- 2,012,835
Foreign currency transactions (866,834) (32,581)
------------------------------
Total currency transactions (866,834) 1,980,254
------------------------------
Total $ (2,069,553) $(15,050,574)
==============================
- --------------------------------------------------------------------------------
As of May 31, 1999, net unrealized depreciation for Federal income tax
purposes aggregated $17,030,828, of which $2,486,510 related to
appreciated securities and $19,517,338 related to depreciated securities.
At May 31, 1999, the aggregate cost of investments for Federal income tax
purposes was $429,595,018.
4 Commitments:
At May 31, 1999, the Portfolio had entered into foreign exchange
contracts, in addition to the contracts listed in the Schedule of
Investments, under which it had agreed to purchase various foreign
currencies with approximate value of $388,000.
May 31, 1999 33 Mercury Global Balanced Fund
<PAGE>
PORTFOLIO INFORMATION
WORLDWIDE INVESTMENTS AS OF MAY 31, 1999
================================================================================
Ten Largest Percent of
Equity Holdings Net Assets
- --------------------------------------------------------------------------------
Microsoft Corporation 1.6%
- --------------------------------------------------------------------------------
General Electric Company 1.4
- --------------------------------------------------------------------------------
Mobil Corporation 1.0
- --------------------------------------------------------------------------------
Wal-Mart Stores, Inc. 1.0
- --------------------------------------------------------------------------------
United Technologies Corporation 1.0
- --------------------------------------------------------------------------------
Walgreen Co. 0.9
- --------------------------------------------------------------------------------
Exxon Corporation 0.9
- --------------------------------------------------------------------------------
American International Group, Inc. 0.8
- --------------------------------------------------------------------------------
Nokia Oyj 0.8
- --------------------------------------------------------------------------------
Sprint Corp. (FON Group) 0.8
- --------------------------------------------------------------------------------
Ten Largest Percent of
Fixed-Income Holdings Net Assets
- --------------------------------------------------------------------------------
United Kingdom Gilt, 7.75% due
9/08/2006 2.7%
- --------------------------------------------------------------------------------
Bundesobligation, 5% due
8/20/2001 2.7
- --------------------------------------------------------------------------------
French Btan, 4.50% due 7/12/2002 2.7
- --------------------------------------------------------------------------------
Bundesrepublic Deutschland,
6.75% due 7/15/2004 2.7
- --------------------------------------------------------------------------------
Bundesrepublic Deutschland,
6.875% due 5/12/2005 2.6
- --------------------------------------------------------------------------------
US Treasury Bonds, 11.75%
due 11/15/2014 2.5
- --------------------------------------------------------------------------------
US Treasury Bonds, 8% due
11/15/2021 2.3
- --------------------------------------------------------------------------------
US Treasury Notes, 5% due
4/30/2001 2.0
- --------------------------------------------------------------------------------
French OAT, 5.25% due 4/25/2008 1.8
- --------------------------------------------------------------------------------
US Treasury Bonds, 10.75%
due 8/15/2005 1.8
- --------------------------------------------------------------------------------
Ten Largest Industries Percent of
(Equity Investments) Net Assets
- --------------------------------------------------------------------------------
Telecommunications 7.3%
- --------------------------------------------------------------------------------
Banking 5.6
- --------------------------------------------------------------------------------
Health & Personal Care 5.3
- --------------------------------------------------------------------------------
Merchandising 4.8
- --------------------------------------------------------------------------------
Energy Sources 3.9
- --------------------------------------------------------------------------------
Electrical & Electronics 3.5
- --------------------------------------------------------------------------------
Insurance 2.9
- --------------------------------------------------------------------------------
Electronic Components/Instruments 2.5
- --------------------------------------------------------------------------------
Business & Public Services 2.4
- --------------------------------------------------------------------------------
Data Processing & Reproduction 2.3
- --------------------------------------------------------------------------------
May 31, 1999 34 Mercury Global Balanced Fund
<PAGE>
OFFICERS AND DIRECTORS
Jeffrey M. Peek, Director and President
David O. Beim, Director
James T. Flynn, Director
W. Carl Kester, Director
Karen P. Robards, Director
Terry K. Glenn, Director and
Executive Vice President
Peter John Gibbs, Senior Vice President
Donald C. Burke, Vice President
and Treasurer
Robert E. Putney, III, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(888) 763-2260
May 31, 1999 35 Mercury Global Balanced 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 and current income. The Fund will seek
to achieve its objective by investing all of its assets in Mercury Master Global
Balanced Portfolio of Mercury Asset Management Master Trust, which has the same
investment objective as the Fund. The Portfolio is managed in two segments, an
equity segment and a bond segment. The Portfolio invests in a mix of stocks and
high-quality bonds of issuers located in the United States and other developed
countries. The Portfolio's neutral position consists of approximately 60%
invested in stocks and 40% in bonds, although the Portfolio may vary each of
these percentages up to 15% in either direction based on current economic and
market conditions. The Fund's investment experience will correspond to the
investment experience of the Portfolio.
Mercury Global Balanced Fund of
Mercury Asset Management Funds, Inc.
Box 9011
Princeton, NJ
08543-9011
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