SEMI-ANNUAL REPORT
NOVEMBER 30, 1999
Mercury
International [GRAPHIC OMITTED]
Fund
OF MERCURY ASSET
MANAGEMENT FUNDS, INC.
--------------------
M E R C U R Y
ASSET MANAGEMENT
--------------------
<PAGE>
MERCURY MASTER
INTERNATIONAL PORTFOLIO
SECTOR REPRESENTATION
================================================================================
As a Percentage of Net Assets as of November 30, 1999
Mercury International Fund - Edgar
A pie chart depicting portfolio composition according to sector representation
for the quarter ended November 30, 1999.
Consumer Goods--16.6%
Services--27.6%
Finance--19.4%
Cash Equivalent--4.2%
Multi-Industry--0.8%
Energy--8.1%
Capital Equipment--18.5%
Materials--4.8%
GEOGRAPHIC ASSET MIX
================================================================================
As a Percentage of Net Assets as of November 30, 1999
A pie chart depicting portfolio composition according to country representation
for the quarter ended November 30, 1999.
Europe--61.0%
Japan--26.3%
Pacific Basin/Asia (Ex Japan & Australia)--5.6%
Australia--2.1%
Cash Equivalent--4.2%
Latin America--0.8%
November 30, 1999 1 Mercury International Fund
<PAGE>
DEAR SHAREHOLDER
We are pleased to provide you with this semi-annual report to shareholders. For
the quarter ended November 30, 1999, Mercury International Fund's Class I, Class
A, Class B and Class C Shares had total returns of +11.86%, +11.80%, +11.61%,
and +11.61%, respectively. (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.) The Fund's unmanaged
benchmark Morgan Stanley Capital International Europe, Asia and Far East (MSCI
EAFE) Index had a total return of +8.43% for the same three-month period. Stock
selection contributed positively to the Fund's returns relative to their
respective regions within the benchmark. Our slight underweighting of Japanese
equities negatively impacted relative performance.
Investment Environment
A growing belief that the US interest rate cycle may be close to its peak and
continuing intensification of merger and acquisition activity underpinned global
equity markets over the November quarter. The technology and telecommunications
sectors pulled up the broader markets despite the legal battle between the
world's largest technology company, Microsoft Corporation, and the US
Government.
A prominent feature of the November quarter was the degree of consolidation,
particularly in European equity markets, with major transactions announced in
the energy, telecommunications, pharmaceutical and financial services sectors.
The proposed take-over of NatWest Bank PLC by Bank of Scotland/Royal Bank of
Scotland led to much speculation surrounding other major banks including Banque
Nationale de Paris, Dresdner Bank and Deutsche Bank. Vodafone AirTouch PLC's
unsolicited bid for Mannesmann AG is still to be resolved but is providing a
boost to the whole telecommunications sector as both companies highlight the
growth potential for wireless data traffic. However, the interventionist
instincts of the German government present a challenge to continuing European
corporate reform.
Doubts about the direction of economic policy in Germany were partly responsible
for the euro's ongoing weakness against the US dollar. At the beginning of the
November quarter, a plethora of data supporting the case for a stronger yen was
released and confidence in the currency was further enhanced by the Bank of
Japan's determination to remain independent and credible in the face of intense
pressure from the Ministry of Finance to relax monetary policy. Lack of
intervention, a record US trade deficit and an unexpectedly strong economy only
served to strengthen the yen further as foreign investors continued to pour
money into the Japanese stock market.
Toward the end of the November quarter, Japanese equity markets experienced a
polarized rally, which saw "new" Japan companies, such as Softbank Corporation
and Nippon Telegraph & Telephone Corporation, outperform while many of the large
names in Japanese banking suffered. Signs of flexibility helped sentiment from
the Bank of Japan with the announcement of the latest fiscal stimulus package,
and continuing growth in corporate earnings.
November 30, 1999 2 Mercury International Fund
<PAGE>
The Pacific Basin enjoyed a strong November, outperforming the MSCI World Index
by almost 5%. The Hong Kong market was boosted by bilateral trade agreements
between the United States and China, as well as higher-than-expected third
quarter gross domestic product growth. In Australia, resource stocks finished
November higher as oil prices rebounded sharply. Positive net inflows into
emerging market equities were underpinned by better-than-expected liquidity
conditions and the willingness of investors to embrace more risk.
Portfolio Activity
Activity in the Japanese portion of the Portfolio included the establishment of
a holding in The Nikko Securities Co., Ltd., the Japanese brokerage house. The
influence of Citigroup has broadened out beyond the Nikko Salomon Smith Barney
joint venture. The combination of Citigroup's risk expertise, product innovation
and cost control and Nikko's distribution system bodes well for earnings. The
company is also well positioned to profit from increased trading activity in the
Japanese stock market. A holding in Sharp Corporation, the world leader in
liquid crystal display (LCD) technology was also initiated. We believe Sharp
will perform strongly next year, buoyed by growing revenues from mobile phones
and personal devices, such as the Palm Pilot and Nintendo Game Boy. Gains made
on Japan Tobacco, Inc. were realized as government intentions to halve the
number of Japanese smokers suggest toughening legislative and tax conditions.
The largest portion of the Portfolio was invested in pan-Europe where Portfolio
activity centered on the retail, telecommunications, and financial services
sectors. We initiated an investment in Carrefour SA because we expect that
synergies from the merger with Promodes SA will be considerable, as will the
improvement in global buying power. The management intends to keep most of the
synergies in the form of higher margins, rather than reinvesting in lower
pricing to drive volume growth, and the outlook for the stock is positive, in
our opinion. At the beginning of November, we increased our holding in
Mannesmann. The company is well placed to capitalize on wireless traffic growth
across Europe and the world, as emphasized by its bid approach from Vodafone. We
sold our position in Societe Generale, on a relative value basis the stock no
longer represented the most attractive means of exposure to the French banking
sector, and its stand alone strategy lacked sufficient clarity.
Investment Outlook
We remain positive regarding the outlook for international equities given strong
economic growth and low inflation. Although we expect there will continue to be
concerns over the potential for higher inflation and therefore higher interest
rates, the sentiment of investors is positive and fund flows into international
equities are run ning at high levels.
Economic recovery in Europe does appear to be gaining momentum, which has led to
steadily rising earnings expectations. Corporate activity remains intense, and
in the Eurozone, increased focus on shareholder value will continue to support
equities.
November 30, 1999 3 Mercury International Fund
<PAGE>
In Conclusion
We thank you for your investment in Mercury International Fund, and we look
forward to serving your investment needs in the months and years ahead.
Sincerely,
/s/ Jeffrey Peek /s/ Charles Prideaux
Jeffrey Peek Charles Prideaux
President Portfolio Manager
January 4, 2000
- --------------------------------------------------------------------------------
To reduce shareholder expenses, Mercury International Fund will no longer be
printing and mailing quarterly reports to shareholders. We will continue to
provide you with reports on a semi-annual and annual basis.
- --------------------------------------------------------------------------------
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.
November 30, 1999 4 Mercury International Fund
<PAGE>
FUND PERFORMANCE DATA (CONCLUDED)
None of the past results shown should be considered a representation of future
performance. Figures shown in the "Recent Performance Results" and "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.
AGGREGATE TOTAL RETURN
================================================================================
% Return % Return
Without Sales With Sales
Class I Shares* Charge Charge**
- --------------------------------------------------------------------------------
Inception (10/30/98)
through 9/30/99 +14.60% +8.58%
- --------------------------------------------------------------------------------
* 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 9/30/99 +14.30% +8.30%
- --------------------------------------------------------------------------------
* Maximum sales charge is 5.25%.
** Assuming maximum sales charge.
% Return % Return
Without With
Class B Shares* CDSC CDSC**
- --------------------------------------------------------------------------------
Inception (10/30/98)
through 9/30/99 +13.50% +9.50%
- --------------------------------------------------------------------------------
* 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 9/30/99 +13.50% +12.50%
- --------------------------------------------------------------------------------
* 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 12 Month Since Inception
As of November 30, 1999 Total Return Total Return Total Return
- --------------------------------------------------------------------------------
Class I +11.86% +24.56% +27.30%
- --------------------------------------------------------------------------------
Class A +11.80 +24.27 +27.00
- --------------------------------------------------------------------------------
Class B +11.61 +23.31 +25.90
- --------------------------------------------------------------------------------
Class C +11.61 +23.31 +25.90
- --------------------------------------------------------------------------------
* Investment results shown do not reflect sales charges; results shown would
be lower if sales charges were included. Total investment returns are
based on changes in the Fund's net asset values for the periods shown, and
assume reinvestment of all dividends and capital gains at net asset value
on the ex-dividend date. The Fund's inception date is 10/30/98.
November 30, 1999 5 Mercury International Fund
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
As of November 30, 1999
- --------------------------------------------------------------------------------
MERCURY INTERNATIONAL FUND
================================================================================
Assets:
Investment in Mercury Master International Portfolio,
at value (identified cost--$407,355,419) $486,833,817
Prepaid registration fees and other assets 56,964
------------
Total assets 486,890,781
------------
- --------------------------------------------------------------------------------
Liabilities:
Payable to distributor 317,863
Payable to administrator 13,508
Accrued expenses and other liabilities 250,884
------------
Total liabilities 582,255
------------
- --------------------------------------------------------------------------------
Net Assets:
Net assets $486,308,526
============
- --------------------------------------------------------------------------------
Net Assets Consist of:
Class I Shares of Common Stock, $.0001 par value, 100,000,000
shares authorized $ 412
Class A Shares of Common Stock, $.0001 par value, 100,000,000
shares authorized 631
Class B Shares of Common Stock, $.0001 par value, 100,000,000
shares authorized 1,592
Class C Shares of Common Stock, $.0001 par value, 100,000,000
shares authorized 1,217
Paid-in capital in excess of par 396,369,045
Accumulated investment loss--net (1,287,162)
Undistributed realized capital gains on investments and
foreign currency transactions from the Portfolio--net 11,744,393
Unrealized appreciation on investments and foreign currency
transactions fromthe Portfolio--net 79,478,398
------------
Net assets $486,308,526
============
- --------------------------------------------------------------------------------
Net Asset Value:
Class I--Based on net assets of $52,468,967 and 4,121,572
shares outstanding $ 12.73
============
Class A--Based on net assets of $80,165,492 and 6,314,517
shares outstanding $ 12.70
============
Class B--Based on net assets of $200,477,175 and 15,923,902
shares outstanding $ 12.59
============
Class C--Based on net assets of $153,196,892 and 12,168,528
shares outstanding $ 12.59
============
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
November 30, 1999 6 Mercury International Fund
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended November 30, 1999
- --------------------------------------------------------------------------------
MERCURY INTERNATIONAL FUND
================================================================================
Investment Income:
Investment income allocated from the Portfolio (net of $304,391
foreign withholding tax) $ 2,624,783
Expenses allocated from the Portfolio (1,812,281)
------------
Net investment income from the Portfolio 812,502
------------
- --------------------------------------------------------------------------------
Expenses:
Account maintenance and distribution fees--Class B $ 856,616
Account maintenance and distribution fees--Class C 659,986
Administration fee 522,093
Transfer agent fees--Class B 99,316
Account maintenance fees--Class A 89,597
Transfer agent fees--Class C 77,129
Registration fees 68,077
Transfer agent fees--Class A 34,278
Printing and shareholder reports 24,993
Transfer agent fees--Class I 20,417
Professional fees 12,967
Accounting services 1,123
Other 1,913
----------
Total expenses 2,468,505
------------
Investment loss--net (1,656,003)
------------
- --------------------------------------------------------------------------------
Realized & Unrealized Gain (Loss) from the Portfolio--Net:
Realized gain (loss) from the Portfolio on:
Investments--net 10,270,696
Foreign currency transactions--net (225,773) 10,044,923
----------
Change in unrealized appreciation on investments and
foreign currency transactions from the Portfolio--net 73,235,690
------------
Net realized and unrealized gain on investments and
foreign currency transactions from the Portfolio 83,280,613
------------
Net Increase in Net Assets Resulting from Operations $ 81,624,610
============
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
November 30, 1999 7 Mercury International Fund
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS
MERCURY INTERNATIONAL FUND
================================================================================
<TABLE>
<CAPTION>
For the Six For the Period
Months Ended Oct. 30, 1998+
Increase (Decrease) in Net Assets: Nov. 30, 1999 to May 31, 1999
---------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Investment income (loss)--net $ (1,656,003) $ 640,423
Realized gain on investments and foreign currency
transactions from the Portfolio--net 10,044,923 1,318,788
Change in unrealized appreciation on investments and
foreign currency transactions from the Portfolio--net 73,235,690 6,242,708
------------------------------
Net increase in net assets resulting from operations 81,624,610 8,201,919
------------------------------
---------------------------------------------------------------------------------------------
Capital Share Transactions:
Net increase in net assets derived from capital
share transactions 59,872,369 336,459,628
------------------------------
---------------------------------------------------------------------------------------------
Net Assets:
Total increase in net assets 141,496,979 344,661,547
Beginning of period 344,811,547 150,000
------------------------------
End of period* $ 486,308,526 $ 344,811,547
==============================
---------------------------------------------------------------------------------------------
* Undistributed (accumulated) investment income (loss)--net $ (1,287,162) $ 368,841
==============================
+ Commencement of operations.
</TABLE>
See Notes to Financial Statements.
November 30, 1999 8 Mercury International Fund
<PAGE>
FINANCIAL HIGHLIGHTS
MERCURY INTERNATIONAL FUND
================================================================================
The following per share data and ratios have been derived from information
provided in the financial statements.
Class I
--------------------------------
For the Six For the Period
Months Ended Oct. 30, 1998+
Increase (Decrease) in Net Asset Value: Nov. 30, 1999** to May 31, 1999
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value, beginning of period $ 10.42 $ 10.00
--------------------------------
Investment income (loss)--net --++++ .06
Realized and unrealized gain on investments
and foreign currency transactions from
the Portfolio--net 2.31 .36
--------------------------------
Total from investment operations 2.31 .42
--------------------------------
Net asset value, end of period $ 12.73 $ 10.42
================================
- --------------------------------------------------------------------------------
Total Investment Return:
Based on net asset value per share 22.17%++ 4.20%++
================================
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses+++ 1.26%* 1.56%*
================================
Investment income (loss)--net (.02%)* 1.21%*
================================
- --------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 52,469 $ 33,958
================================
- --------------------------------------------------------------------------------
* Annualized.
** Based on average shares outstanding.
+ Commencement of operations.
+++ Includes the Fund's share of the Portfolio's allocated expenses.
++ Aggregate total investment return.
++++ Amount is less than $.01 per share.
See Notes to Financial Statements.
November 30, 1999 9 Mercury International Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
MERCURY INTERNATIONAL FUND
================================================================================
The following per share data and ratios have been derived from information
provided in the financial statements.
Class A
--------------------------------
For the Six For the Period
Months Ended Oct. 30, 1998+
Increase (Decrease) in Net Asset Value: Nov. 30, 1999** to May 31, 1999
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value, beginning of period $ 10.40 $ 10.00
--------------------------------
Investment income (loss)--net (.01) .05
Realized and unrealized gain on investments
and foreign currency transactions from
the Portfolio--net 2.31 .35
--------------------------------
Total from investment operations 2.30 .40
--------------------------------
Net asset value, end of period $ 12.70 $ 10.40
================================
- --------------------------------------------------------------------------------
Total Investment Return:
Based on net asset value per share 22.12%++ 4.00%++
================================
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses+++ 1.51%* 1.82%*
================================
Investment income (loss)--net (.25%)* .96%*
================================
- --------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 80,166 $ 59,373
================================
- --------------------------------------------------------------------------------
* Annualized.
** Based on average shares outstanding.
+ Commencement of operations.
+++ Includes the Fund's share of the Portfolio's allocated expenses.
++ Aggregate total investment return.
See Notes to Financial Statements.
November 30, 1999 10 Mercury International Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
MERCURY INTERNATIONAL FUND
================================================================================
The following per share data and ratios have been derived from information
provided in the financial statements.
Class B
--------------------------------
For the Six For the Period
Months Ended Oct. 30, 1998+
Increase (Decrease) in Net Asset Value: Nov. 30, 1999** to May 31, 1999
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value, beginning of period $ 10.36 $ 10.00
--------------------------------
Investment income (loss)--net (.06) .01
Realized and unrealized gain on investments
and foreign currency transactions from
the Portfolio--net 2.29 .35
--------------------------------
Total from investment operations 2.23 .36
--------------------------------
Net asset value, end of period $ 12.59 $ 10.36
================================
- --------------------------------------------------------------------------------
Total Investment Return:
Based on net asset value per share 21.53%++ 3.60%++
================================
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses+++ 2.28%* 2.55%*
================================
Investment income (loss)--net (1.03%)* .12%*
================================
- --------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 200,477 $ 142,434
================================
- --------------------------------------------------------------------------------
* Annualized.
** Based on average shares outstanding.
+ Commencement of operations.
+++ Includes the Fund's share of the Portfolio's allocated expenses.
++ Aggregate total investment return.
See Notes to Financial Statements.
November 30, 1999 11 Mercury International Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONCLUDED)
MERCURY INTERNATIONAL FUND
================================================================================
The following per share data and ratios have been derived from information
provided in the financial statements.
Class C
--------------------------------
For the Six For the Period
Months Ended Oct. 30, 1998+
Increase (Decrease) in Net Asset Value: Nov. 30, 1999** to May 31, 1999
- --------------------------------------------------------------------------------
Per Share Operating Performance:
Net asset value, beginning of period $ 10.36 $ 10.00
--------------------------------
Investment income (loss)--net (.06) .01
Realized and unrealized gain on investments
and foreign currency transactions from
the Portfolio--net 2.29 .35
--------------------------------
Total from investment operations 2.23 .36
--------------------------------
Net asset value, end of period $ 12.59 $ 10.36
================================
- --------------------------------------------------------------------------------
Total Investment Return:
Based on net asset value per share 21.53%++ 3.60%++
================================
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses+++ 2.28%* 2.56%*
================================
Investment income (loss)--net (1.03%)* .14%*
================================
- --------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 153,197 $ 109,047
================================
- --------------------------------------------------------------------------------
* Annualized.
** Based on average shares outstanding.
+ Commencement of operations.
+++ Includes the Fund's share of the Portfolio's allocated expenses.
++ Aggregate total investment return.
See Notes to Financial Statements.
November 30, 1999 12 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MERCURY INTERNATIONAL FUND
================================================================================
1 Significant Accounting Policies:
Mercury International Fund (the "Fund") is part of Mercury Asset
Management Funds, Inc. (the "Corporation"). The Fund is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The Fund seeks to achieve its investment objective by
investing all of its assets in the Mercury Master International Portfolio
(the "Portfolio") of Mercury Asset Management Master Trust (the "Trust"),
which has the same investment objective as the Fund. The value of the
Fund's investment in the Portfolio reflects the Fund's proportionate
interest in the net assets of the Portfolio. The performance of the Fund
is directly affected by the performance of the Portfolio. The financial
statements of the Portfolio, including the Schedule of Investments, are
included elsewhere in this report and should be read in conjunction with
the Fund's financial statements. 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 provision is required. Under the
applicable foreign tax law, withholding taxes may be imposed on interest,
dividends and capital gains at various rates.
November 30, 1999 13 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(d) Prepaid registration fees--Prepaid registration fees are charged to
expenses as the related shares are issued.
(e) Dividends and distributions--Dividends and distributions paid by the
Fund are recorded on the ex-dividend dates.
(f) Investment transactions--Investment transactions are accounted for on
a trade date basis.
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 .25% of the Fund's average daily net assets for
the performance of administrative services (other than investment advice
and related portfolio activities) necessary for the operation of the Fund.
The Corporation has also entered into a Distribution Agreement and
Distribution Plans with Mercury Funds Distributor ("MFD" or the
"Distributor"), a division of Princeton Funds Distributor, Inc. ("PFD"), a
wholly-owned subsidiary of Merrill Lynch Group, Inc. Pursuant to the
Distribution Plans adopted by the Corporation in accordance with Rule
12b-1 under the Investment Company Act of 1940, the Fund pays the
Distributor ongoing account maintenance and distribution fees. The fees
are accrued daily and paid monthly at annual rates based upon the average
daily net assets of the shares as follows:
Account Distribution
Maintenance Fee Fee
==========================================================================
Class A .25% --
--------------------------------------------------------------------------
Class B .25% .75%
--------------------------------------------------------------------------
Class C .25% .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 ongoing account maintenance fee compensates the
Distributor, MLPF&S and selected dealers for providing account maintenance
services to Class A, Class B and Class C shareholders. The ongoing
distribution fee compensates the Distributor, MLPF&S and selected dealers
for providing shareholder and distribution-related services to Class B and
Class C shareholders.
November 30, 1999 14 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
For the six months ended November 30, 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 $10,912 $178,653
--------------------------------------------------------------------------
For the six months ended November 30, 1999, MLPF&S received contingent
deferred sales charges of $278,704 and $65,857 relating to transactions in
Class B and Class C Shares, respectively. Furthermore, MLPF&S received
contingent deferred sales charges of $900 relating to transactions subject
to front-end sales charge waivers in Class A Shares.
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 six months ended November 30, 1999 were $66,204,075 and $8,837,390,
respectively.
4 Capital Share Transactions:
Net increase in net assets derived from capital share transactions was
$59,872,369 and $336,459,628 for the six months ended November 30, 1999
and for the period October 30, 1998 to May 31, 1999, respectively.
Transactions in capital shares for each class were as follows:
Class I Shares for the Six Months Ended
November 30, 1999 Shares Dollar Amount
==========================================================================
Shares sold 2,107,222 $ 23,893,338
Shares redeemed (1,245,286) (14,035,275)
-------------------------
Net increase 861,936 $ 9,858,063
=========================
--------------------------------------------------------------------------
Class I Shares for the Period October 30, 1998+
to May 31, 1999 Shares Dollar Amount
==========================================================================
Shares sold 4,172,807 $ 42,867,726
Shares redeemed (916,921) (9,645,414)
-------------------------
Net increase 3,255,886 $ 33,222,312
=========================
--------------------------------------------------------------------------
+ Prior to October 30, 1998 (commencement of operations), the Fund issued
3,750 shares to Mercury International for $37,500.
November 30, 1999 15 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONCLUDED)
Class A Shares for the Six Months Ended
November 30, 1999 Shares Dollar Amount
==========================================================================
Shares sold 1,347,525 $ 15,398,304
Shares redeemed (740,749) (8,647,680)
--------------------------
Net increase 606,776 $ 6,750,624
==========================
--------------------------------------------------------------------------
Class A Shares for the Period October 30, 1998+
to May 31, 1999 Shares Dollar Amount
==========================================================================
Shares sold 6,270,524 $ 63,892,653
Shares redeemed (566,533) (5,972,511)
--------------------------
Net increase 5,703,991 $ 57,920,142
==========================
--------------------------------------------------------------------------
+ Prior to October 30, 1998 (commencement of operations), the Fund issued
3,750 shares to Mercury International for $37,500.
Class B Shares for the Six Months Ended
November 30, 1999 Shares Dollar Amount
==========================================================================
Shares sold 3,158,787 $ 35,986,043
Shares redeemed (988,606) (11,268,574)
--------------------------
Net increase 2,170,181 $ 24,717,469
==========================
--------------------------------------------------------------------------
Class B Shares for the Period October 30, 1998+
to May 31, 1999 Shares Dollar Amount
==========================================================================
Shares sold 14,517,982 $146,815,939
Shares redeemed (768,011) (8,017,841)
--------------------------
Net increase 13,749,971 $138,798,098
==========================
--------------------------------------------------------------------------
+ Prior to October 30, 1998 (commencement of operations), the Fund issued
3,750 shares to Mercury International for $37,500.
Class C Shares for the Six Months Ended
November 30, 1999 Shares Dollar Amount
==========================================================================
Shares sold 2,508,232 $ 28,561,615
Shares redeemed (869,449) (10,015,402)
--------------------------
Net increase 1,638,783 $ 18,546,213
==========================
--------------------------------------------------------------------------
Class C Shares for the Period October 30, 1998+
to May 31, 1999 Shares Dollar Amount
==========================================================================
Shares sold 11,118,122 $112,707,710
Shares redeemed (592,127) (6,188,634)
--------------------------
Net increase 10,525,995 $106,519,076
==========================
--------------------------------------------------------------------------
+ Prior to October 30, 1998 (commencement of operations), the Fund issued
3,750 shares to Mercury International for $37,500.
5 Subsequent Event:
On December 8, 1999, the Portfolio's Board of Directors declared an
ordinary income dividend in the amount of $.279162 per Class I Share,
$.250849 per Class A Share, $.166380 per Class B Share and $.166865 per
Class C Share payable on December 16, 1999 to shareholders of record as of
December 8, 1999.
November 30, 1999 16 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
In US Dollars
------------------------
Shares Percent of
Industries Held Investments Value Net Assets
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EUROPE
=========================================================================================
Belgium
Insurance 106,568 Fortis 'B' $ 3,672,628 0.8%
- -----------------------------------------------------------------------------------------
Utilities-- 7,229 Electrabel SA 2,305,720 0.4
Electric & Gas
- -----------------------------------------------------------------------------------------
Total Investments in Belgium 5,978,348 1.2
- -----------------------------------------------------------------------------------------
Finland
Electrical & 90,661 Nokia Oyj 12,833,616 2.6
Electronics
- -----------------------------------------------------------------------------------------
Total Investments in Finland 12,833,616 2.6
- -----------------------------------------------------------------------------------------
France
Automobiles 37,661 Valeo SA 2,521,487 0.5
- -----------------------------------------------------------------------------------------
Banking 36,307 Banque Nationale de Paris (BNP) 3,326,404 0.7
- -----------------------------------------------------------------------------------------
Business/Public 62,029 Vivendi 4,933,613 1.0
Services
- -----------------------------------------------------------------------------------------
Energy Sources 70,610 Total Fina SA 'B' 9,391,009 1.9
- -----------------------------------------------------------------------------------------
Insurance 46,446 Axa 6,261,409 1.3
- -----------------------------------------------------------------------------------------
Leisure/Tourism 19,173 Accor SA 4,350,981 0.9
- -----------------------------------------------------------------------------------------
Merchandising 24,281 Carrefour SA 4,229,177 0.9
27,509 Pinault-Printemps-Redoute SA 5,733,085 1.2
------------------------
9,962,262 2.1
- -----------------------------------------------------------------------------------------
Metals--Steel 67,554 Usinor SA 1,033,803 0.2
- -----------------------------------------------------------------------------------------
Total Investments in France 41,780,968 8.6
- -----------------------------------------------------------------------------------------
Germany
Automobiles 31,805 DaimlerChrysler AG 2,164,638 0.4
- -----------------------------------------------------------------------------------------
Banking 53,597 HypoVereinsbank 3,324,026 0.7
- -----------------------------------------------------------------------------------------
Chemicals 86,239 Bayer AG 3,646,668 0.7
- -----------------------------------------------------------------------------------------
Electrical & 85,063 Siemens AG 8,572,707 1.8
Electronics
- -----------------------------------------------------------------------------------------
Insurance 17,871 Allianz AG (Registered Shares) 5,231,326 1.1
- -----------------------------------------------------------------------------------------
Telecommuni- 109,050 Mannesmann AG 22,660,974 4.7
cations
- -----------------------------------------------------------------------------------------
Transportation-- 59,413 Deutsche Lufthansa AG
Airlines (Registered Shares) 1,307,600 0.2
- -----------------------------------------------------------------------------------------
Total Investments in Germany 46,907,939 9.6
- -----------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 17 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
---------------------
Shares Percent of
Industries Held Investments Value Net Assets
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EUROPE (continued)
=============================================================================================
Italy
Banking 783,567 Unicredito Italiano SpA $ 3,652,585 0.8%
- ---------------------------------------------------------------------------------------------
Energy Sources 534,231 ENI SpA 2,925,979 0.6
- ---------------------------------------------------------------------------------------------
Total Investments in Italy 6,578,564 1.4
- ---------------------------------------------------------------------------------------------
Luxembourg
Banking 38,198 Safra Republic Holdings, SA 2,635,662 0.6
- ---------------------------------------------------------------------------------------------
Total Investments in Luxembourg 2,635,662 0.6
- ---------------------------------------------------------------------------------------------
Netherlands
Appliances & 42,723 Koninklijke (Royal) Philips
Household Durables Electronics NV 5,198,183 1.1
- ---------------------------------------------------------------------------------------------
Beverages & Tobacco 59,001 Heineken NV 2,851,306 0.6
- ---------------------------------------------------------------------------------------------
Broadcasting & 88,697 Wolters Kluwer NV 'A' 2,674,539 0.5
Publishing
- ---------------------------------------------------------------------------------------------
Chemicals 78,681 Akzo Nobel NV 3,366,681 0.7
- ---------------------------------------------------------------------------------------------
Energy Sources 103,152 Royal Dutch Petroleum Company 6,068,156 1.2
- ---------------------------------------------------------------------------------------------
Food & Household 91,316 Koninklijke Numico NV 3,355,699 0.7
Products 89,049 Unilever NV 'A' 4,904,103 1.0
---------------------
8,259,802 1.7
- ---------------------------------------------------------------------------------------------
Insurance 119,545 ING Groep NV 6,721,989 1.4
- ---------------------------------------------------------------------------------------------
Total Investments in the Netherlands 35,140,656 7.2
- ---------------------------------------------------------------------------------------------
Norway
Insurance 250,000 + Storebrand ASA 1,754,005 0.4
- ---------------------------------------------------------------------------------------------
Total Investments in Norway 1,754,005 0.4
- ---------------------------------------------------------------------------------------------
Spain
Banking 424,831 Banco Santander Central Hispano, SA 4,666,424 1.0
- ---------------------------------------------------------------------------------------------
Data Processing & 620 + Terra Networks, SA (ADR)* 20,925 0.0
Reproduction
- ---------------------------------------------------------------------------------------------
Telecommuni- 365,172 + Telefonica SA 7,603,109 1.6
cations 7,096 + Telefonica SA (New Shares) 135,955 0.0
---------------------
7,739,064 1.6
- ---------------------------------------------------------------------------------------------
Total Investments in Spain 12,426,413 2.6
- ---------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 18 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
------------------------
Shares Percent of
Industries Held Investments Value Net Assets
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EUROPE (continued)
================================================================================================
Sweden
Electrical & 29,378 + ABB Ltd. $ 2,890,093 0.6%
Electronics 117,014 Telefonaktiebolaget LM Ericsson 'B' 5,679,957 1.2
------------------------
8,570,050 1.8
- ------------------------------------------------------------------------------------------------
Insurance 76,276 Skandia Forsakrings AB 1,826,567 0.3
- ------------------------------------------------------------------------------------------------
Multi-Industry 209,977 Investor AB 'B' 2,829,179 0.6
- ------------------------------------------------------------------------------------------------
Total Investments in Sweden 13,225,796 2.7
- ------------------------------------------------------------------------------------------------
Switzerland
Banking 18,627 Credit Suisse Group
(Registered Shares) 3,483,926 0.7
- ------------------------------------------------------------------------------------------------
Business/Public 7,264 Adecco SA (Registered Shares) 4,644,466 0.9
Services
- ------------------------------------------------------------------------------------------------
Food & Household 2,406 Nestle SA (Registered Shares) 4,329,166 0.9
Products
- ------------------------------------------------------------------------------------------------
Health & Personal 3,449 Novartis AG (Registered Shares) 5,375,375 1.1
Care 433 Roche Holding AG 5,226,707 1.1
------------------------
10,602,082 2.2
- ------------------------------------------------------------------------------------------------
Total Investments in Switzerland 23,059,640 4.7
- ------------------------------------------------------------------------------------------------
United Kingdom
Aerospace & 430,358 British Aerospace PLC 2,457,595 0.5
Military Technology
- ------------------------------------------------------------------------------------------------
Banking 203,175 Barclays PLC 5,853,793 1.2
396,180 Lloyds TSB Group PLC 5,060,881 1.0
------------------------
10,914,674 2.2
- ------------------------------------------------------------------------------------------------
Beverages & 277,901 Diageo PLC 2,512,621 0.5
Tobacco
- ------------------------------------------------------------------------------------------------
Broadcasting & 424,753 Reed International PLC 2,653,778 0.6
Publishing
- ------------------------------------------------------------------------------------------------
Energy Sources 782,009 BP Amoco PLC 7,941,836 1.6
- ------------------------------------------------------------------------------------------------
Health & Personal 102,658 AstraZeneca Group PLC 4,572,240 0.9
Care 334,769 Glaxo Wellcome PLC 10,007,586 2.1
344,259 SmithKline Beecham PLC 4,592,169 0.9
------------------------
19,171,995 3.9
- ------------------------------------------------------------------------------------------------
Insurance 226,354 Allied Zurich PLC 2,734,755 0.6
191,187 CGU PLC 2,891,149 0.6
------------------------
5,625,904 1.2
- ------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 19 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
-------------------------
Shares Percent of
Industries Held Investments Value Net Assets
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EUROPE (concluded)
================================================================================================
United Kingdom (concluded)
Leisure/Tourism 214,365 Granada Group PLC $ 1,757,315 0.4%
- ------------------------------------------------------------------------------------------------
Merchandising 87,123 Dixons Group PLC 1,894,401 0.4
104,657 Kingfisher PLC 964,574 0.2
1,711,403 Tesco PLC 4,617,538 0.9
-------------------------
7,476,513 1.5
- ------------------------------------------------------------------------------------------------
Metals/Non-Ferrous 71,875Rio Tinto PLC (Registered Shares) 1,407,251 0.3
- ------------------------------------------------------------------------------------------------
Mining 18,000 Anglo American PLC 1,056,490 0.2
- ------------------------------------------------------------------------------------------------
Recreation & Other 196,310 EMI Group PLC 1,610,867 0.3
Consumer Goods
- ------------------------------------------------------------------------------------------------
Telecommuni- 471,612 British Telecommunications PLC 9,447,710 2.0
cations 300,197 Cable & Wireless PLC 3,846,721 0.8
1,914,546 Vodafone AirTouch PLC 8,997,963 1.8
-------------------------
22,292,394 4.6
- ------------------------------------------------------------------------------------------------
Transportation-- 267,614 The Peninsular and Oriental Steam
Shipping Navigation Company 3,923,349 0.8
- ------------------------------------------------------------------------------------------------
Utilities-- 694,740 BG PLC 3,643,898 0.8
Electric & Gas
- ------------------------------------------------------------------------------------------------
Total Investments in the
United Kingdom 94,446,480 19.4
- ------------------------------------------------------------------------------------------------
Total Investments in Europe
(Cost--$270,766,780) 296,768,087 61.0
- ------------------------------------------------------------------------------------------------
LATIN AMERICA
================================================================================================
Brazil
Banking 11,200 Uniao de Bancos Brasileiros SA
(Unibanco) (GDR)** 263,900 0.1
- ------------------------------------------------------------------------------------------------
Beverages & Tobacco 10,800 Companhia Cervejaria Brahma
(Preferred) (ADR)* 140,400 0.0
- ------------------------------------------------------------------------------------------------
Telecommunications 5,600 Tele Centro Sul Participacoes
SA (ADR)* 382,200 0.1
9,400 Telesp Celular Participacoes
SA (ADR)* 269,663 0.0
18,500 Telesp Participacoes SA (ADR)* 333,000 0.1
-------------------------
984,863 0.2
- ------------------------------------------------------------------------------------------------
Total Investments in Brazil 1,389,163 0.3
- ------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 20 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
-------------------------
Shares Percent of
Industries Held Investments Value Net Assets
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
LATIN AMERICA (concluded)
================================================================================================
Chile
Beverages & Tobacco 4,200 Compania Cervecerias Unidas
SA (ADR)* $ 117,600 0.0%
- ------------------------------------------------------------------------------------------------
Total Investments in Chile 117,600 0.0
- ------------------------------------------------------------------------------------------------
Mexico
Beverages & Tobacco 37,500 Coca-Cola Femsa SA (ADR)* 576,563 0.1
6,000 Fomento Economico Mexicano,
SA de CV (ADR)* 227,250 0.1
-------------------------
803,813 0.2
- ------------------------------------------------------------------------------------------------
Broadcasting & 22,000 + Grupo Televisa SA (GDR)** 1,073,875 0.2
Publishing
- ------------------------------------------------------------------------------------------------
Construction & 8,500 Desc, SA de CV (ADR)* 146,625 0.0
Housing
- ------------------------------------------------------------------------------------------------
Primary Metals 12,900 Tubos de Acero de Mexico SA (ADR)* 162,056 0.0
- ------------------------------------------------------------------------------------------------
Telecommunications 4,600 Telefonos de Mexico SA (ADR)* 425,788 0.1
- ------------------------------------------------------------------------------------------------
Total Investments in Mexico 2,612,157 0.5
- ------------------------------------------------------------------------------------------------
Total Investments in Latin America
(Cost--$4,074,291) 4,118,920 0.8
- ------------------------------------------------------------------------------------------------
PACIFIC BASIN/ASIA
================================================================================================
Australia
Banking 118,000 Colonial Limited 470,403 0.1
90,000 Commonwealth Bank of Australia 1,484,339 0.3
-------------------------
1,954,742 0.4
- ------------------------------------------------------------------------------------------------
Beverages & Tobacco 9,000 Foster's Brewing Group Limited 24,131 0.0
- ------------------------------------------------------------------------------------------------
Business/Public 34,000 Brambles Industries Limited 932,696 0.2
Services
- ------------------------------------------------------------------------------------------------
Electrical & 208,000 Telstra Corporation Limited 1,211,377 0.2
Electronics
- ------------------------------------------------------------------------------------------------
Energy Sources 90,000 Broken Hill Proprietary Company
Limited 986,908 0.2
- ------------------------------------------------------------------------------------------------
Forest Products & 200,000 Amcor Limited 868,248 0.2
Paper
- ------------------------------------------------------------------------------------------------
Merchandising 267,000 Coles Myer Limited 1,358,069 0.3
- ------------------------------------------------------------------------------------------------
Metals/Non-Ferrous 110,000 Rio Tinto Limited 1,926,792 0.4
- ------------------------------------------------------------------------------------------------
Recreation & Other 110,000 TABCORP Holdings Limited 750,994 0.2
Consumer Goods
- ------------------------------------------------------------------------------------------------
Total Investments in Australia 10,013,957 2.1
- ------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 21 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
-------------------------
Shares Percent of
Industries Held Investments Value Net Assets
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PACIFIC BASIN/ASIA (continued)
================================================================================================
Hong Kong
Banking 81,000 HSBC Holdings PLC $ 1,069,097 0.2%
365,741 HSBC Holdings PLC (GBP) 4,712,800 1.0
-------------------------
5,781,897 1.2
- ------------------------------------------------------------------------------------------------
Industrial-- 283,000 Hutchison Whampoa Limited 3,489,261 0.7
Components
- ------------------------------------------------------------------------------------------------
Transportation-- 1,085,000 Cathay Pacific Airways 2,067,758 0.4
Airlines
- ------------------------------------------------------------------------------------------------
Utilities-- 1,733,100 Hong Kong and China Gas
Electric & Gas Company Ltd. 2,253,996 0.5
- ------------------------------------------------------------------------------------------------
Total Investments in Hong Kong 13,592,912 2.8
- ------------------------------------------------------------------------------------------------
Japan
Appliances & 69,000 Matsushita Electric Industrial
Household Company, Ltd. 1,745,425 0.3
Durables 148,000 Sharp Corporation 3,019,669 0.6
23,000 Sony Corporation 4,253,841 0.9
-------------------------
9,018,935 1.8
- ------------------------------------------------------------------------------------------------
Automobiles 80,000 Toyota Motor Corporation 2,708,680 0.6
- ------------------------------------------------------------------------------------------------
Banking 179,000 The Fuji Bank, Limited 2,140,503 0.5
175,000 The Sanwa Bank, Ltd. 2,123,495 0.4
159,000 The Sumitomo Bank, Ltd. 2,435,023 0.5
235,000 The Tokai Bank Ltd. 1,625,844 0.3
-------------------------
8,324,865 1.7
- ------------------------------------------------------------------------------------------------
Chemicals 395,000 Asahi Chemical Industry Co., Ltd. 2,149,134 0.4
332,000 Mitsui Chemicals Inc. 2,716,039 0.6
370,000 Toray Industries, Inc. 1,799,491 0.4
-------------------------
6,664,664 1.4
- ------------------------------------------------------------------------------------------------
Construction & 250,000 Sekisui House, Ltd. 2,421,959 0.5
Housing
- ------------------------------------------------------------------------------------------------
Data Processing & 96,000 Fujitsu Limited 3,400,724 0.7
Reproduction 19,000 Trend Micro Incorporated 3,997,456 0.8
-------------------------
7,398,180 1.5
- ------------------------------------------------------------------------------------------------
Electrical & 294,000 Hitachi Ltd. 4,056,561 0.8
Electronics 104,000 NEC Corporation 2,427,243 0.5
286 NTT Data Corporation 6,968,784 1.4
7,100 Softbank Corporation 5,120,560 1.1
-------------------------
18,573,148 3.8
- ------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 22 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
-------------------------
Shares Percent of
Industries Held Investments Value Net Assets
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PACIFIC BASIN/ASIA (continued)
================================================================================================
Japan (concluded)
Electronic 10,000 Fujitsu Support and Service Inc.
Components/ (FSAS) $ 4,207,848 0.8%
Instruments 31,000 Murata Manufacturing Co., Ltd. 5,132,792 1.1
-------------------------
9,340,640 1.9
- ------------------------------------------------------------------------------------------------
Energy Sources 338,000 Mitsui Mining & Smelting Co., Ltd. 1,769,547 0.4
- ------------------------------------------------------------------------------------------------
Financial Services 340,000 The Nikko Securities Co., Ltd. 4,225,462 0.9
176,000 The Nomura Securities Co., Ltd. 3,134,553 0.6
-------------------------
7,360,015 1.5
- ------------------------------------------------------------------------------------------------
Food & Household 97,000 Kao Corporation 2,876,113 0.6
Products
- ------------------------------------------------------------------------------------------------
Health & Personal 56,000 Takeda Chemical Industries, Ltd. 3,298,953 0.7
Care
- ------------------------------------------------------------------------------------------------
Industrial-- 72,000 Bridgestone Corp. 1,775,516 0.4
Components 189,000 Minebea Company Ltd. 2,946,247 0.6
-------------------------
4,721,763 1.0
- ------------------------------------------------------------------------------------------------
Insurance 145,000 The Sumitomo Marine & Fire
Insurance Co., Ltd. 1,020,207 0.2
- ------------------------------------------------------------------------------------------------
Machinery & 63,000 Komori Corporation 1,236,080 0.3
Engineering 361,000 NSK Limited 3,069,860 0.6
662,000 Sumitomo Heavy Industries, Ltd. 1,956,395 0.4
-------------------------
6,262,335 1.3
- ------------------------------------------------------------------------------------------------
Merchandising 10,000 Tokyo Electron Limited 1,037,283 0.2
- ------------------------------------------------------------------------------------------------
Metals--Steel 875,000 Nippon Steel Corporation 1,969,371 0.4
- ------------------------------------------------------------------------------------------------
Metals/Non-Ferrous 236,000 Mitsubishi Materials Corporation 508,073 0.1
- ------------------------------------------------------------------------------------------------
Real Estate 287,000 Mitsubishi Estate Company, Limited 3,089,343 0.6
- ------------------------------------------------------------------------------------------------
Telecommunications 252 NTT Mobile Communications
Network, Inc. 8,828,261 1.8
700 Nippon Telegraph & Telephone
Corporation (NTT) 12,535,473 2.6
-------------------------
21,363,734 4.4
- ------------------------------------------------------------------------------------------------
Textiles & Apparel 24,000 World Co., Ltd. 3,172,913 0.7
- ------------------------------------------------------------------------------------------------
Transportation-- 407 East Japan Railway Company 2,389,666 0.5
Road & Rail
- ------------------------------------------------------------------------------------------------
Utilities-- 90,000 Tokyo Electric Power 2,532,048 0.5
Electric & Gas
- ------------------------------------------------------------------------------------------------
Total Investments in Japan 127,822,435 26.3
- ------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 23 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
In US Dollars
-------------------------
Shares Percent of
Industries Held Investments Value Net Assets
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PACIFIC BASIN/ASIA (continued)
================================================================================================
Singapore
Broadcasting & 105,000 Singapore Press Holdings Ltd. $ 1,967,813 0.4%
Publishing
- ------------------------------------------------------------------------------------------------
Multi-Industry 250,000 NatSteel Electronics Ltd. 1,033,734 0.2
- ------------------------------------------------------------------------------------------------
Transportation-- 134,000 Singapore Airlines Limited 'Foreign' 1,355,307 0.3
Airlines
- ------------------------------------------------------------------------------------------------
Total Investments in Singapore 4,356,854 0.9
- ------------------------------------------------------------------------------------------------
South Korea
Electronic 13,500 Samsung Electronics (GDR)** (a) 1,396,575 0.3
Components/
Instruments
- ------------------------------------------------------------------------------------------------
Financial Services 48,419 Kookmin Bank (GDR)** (a) 760,178 0.2
- ------------------------------------------------------------------------------------------------
Metals--Steel 18,000 Pohang Iron & Steel Company
Ltd. (ADR)* 646,875 0.1
- ------------------------------------------------------------------------------------------------
Telecommunications 25,000 + Korea Telecom Corporation (ADR)* 1,325,000 0.3
- ------------------------------------------------------------------------------------------------
Utilities--Electric & 36,000 Korea Electric Power Corporation
Gas (ADR)* 720,000 0.1
- ------------------------------------------------------------------------------------------------
Total Investments in South Korea 4,848,628 1.0
- ------------------------------------------------------------------------------------------------
Taiwan
Data Processing & 50,000 Asustek Computer Inc. (GDR)** 757,500 0.1
Reproduction 70,000 + Siliconware Precision Industries
Company (GDR)** 913,500 0.2
28,290 + Taiwan Semiconductor Manufacturing
Company Ltd. (ADR)* 1,013,136 0.2
-------------------------
2,684,136 0.5
- ------------------------------------------------------------------------------------------------
Metals--Steel 35,760 China Steel Corporation (GDR)** 611,496 0.1
- ------------------------------------------------------------------------------------------------
Total Investments in Taiwan 3,295,632 0.6
- ------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 24 Mercury International Fund
<PAGE>
SCHEDULE OF INVESTMENTS (CONCLUDED)
<TABLE>
<CAPTION>
In US Dollars
-------------------------
Shares Percent of
Industries Held Investments Value Net Assets
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PACIFIC BASIN/ASIA (concluded)
================================================================================================
Thailand
Banking 300,000 + Thai Farmers Bank Public Company $ 404,053 0.1%
Limited 'Foreign'
- ------------------------------------------------------------------------------------------------
Business/Public 40,000 + Advanced Info Service Public
Services Company Limited 'Foreign' 572,601 0.1
- ------------------------------------------------------------------------------------------------
Telecommunications 250,000 Total Access Communication Public
Company Limited (ADR)* 715,000 0.1
- ------------------------------------------------------------------------------------------------
Total Investments in Thailand 1,691,654 0.3
- ------------------------------------------------------------------------------------------------
Total Investments in the
Pacific Basin/Asia
(Cost--$112,179,813) 165,622,072 34.0
- ------------------------------------------------------------------------------------------------
Total Investments
(Cost--$387,020,884) 466,509,079 95.8
Time Deposit*** 15,312,000 3.2
Other Assets Less Liabilities 5,012,864 1.0
-------------------------
Net Assets $486,833,943 100.0%
=========================
- ------------------------------------------------------------------------------------------------
</TABLE>
* American Depositary Receipts (ADR).
** Global Depositary Receipts (GDR).
*** Time deposit bears interest at 5.687% and matures on 12/01/1999.
+ Non-income producing security.
(a) The security may be offered and sold to "qualified institutional buyers"
under Rule 144A of the Securities Act of 1933.
See Notes to Financial Statements.
November 30, 1999 25 Mercury International Fund
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
As of November 30, 1999
- --------------------------------------------------------------------------------
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
<TABLE>
<S> <C> <C>
Assets:
Investments, at value (identified cost--$387,020,884) $466,509,079
Time deposit 15,312,000
Receivables:
Securities sold $ 5,342,340
Contributions 1,222,691
Dividends 790,423
Interest 2,419 7,357,873
-----------
Prepaid expenses 3,746
------------
Total assets 489,182,698
------------
- ------------------------------------------------------------------------------------
Liabilities:
Payables:
Custodian bank 1,440,095
Withdrawals 699,271
Securities purchased 42,307
Investment adviser 40,569 2,222,242
-----------
Accrued expenses and other liabilities 126,513
------------
Total liabilities 2,348,755
------------
- ------------------------------------------------------------------------------------
Net Assets:
Net assets $486,833,943
============
- ------------------------------------------------------------------------------------
Net Assets Consist of:
Partners' capital $407,355,521
Unrealized appreciation on investments and foreign
currency transactions--net 79,478,422
------------
Net assets $486,833,943
============
- ------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
November 30, 1999 26 Mercury International Fund
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended November 30, 1999
- --------------------------------------------------------------------------------
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
<TABLE>
<S> <C> <C>
Investment Income:
Dividends (net of $304,391 foreign withholding tax) $ 2,298,782
Interest and discount earned 326,001
-----------
Total income 2,624,783
-----------
- -----------------------------------------------------------------------------------------
Expenses:
Investment advisory fees $ 1,567,739
Custodian fees 168,010
Accounting services 31,727
Professional fees 31,589
Trustees' fees and expenses 13,216
-----------
Total expenses 1,812,281
-----------
Investment income--net 812,502
-----------
- -----------------------------------------------------------------------------------------
Realized & Unrealized Gain (Loss) on Investments &
Foreign Currency Transactions--Net:
Realized gain (loss) from:
Investments--net 10,270,699
Foreign currency transactions--net (225,773) 10,044,926
-----------
Change in unrealized appreciation/depreciation on:
Investments--net 73,163,330
Foreign currency transactions--net 72,380 73,235,710
--------------------------
Net realized and unrealized gain on investments and foreign
currency transactions 83,280,636
-----------
Net Increase in Net Assets Resulting from Operations $84,093,138
===========
- -----------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
November 30, 1999 27 Mercury International Fund
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
For the Six For the Period
Months Ended Oct. 30, 1998+
Increase in Net Assets: Nov. 30, 1999 to May 31, 1999
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Investment income--net $ 812,502 $ 3,082,401
Realized gain on investments and foreign currency
transactions--net 10,044,926 1,318,788
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net 73,235,710 6,242,712
------------------------------
Net increase in net assets resulting from operations 84,093,138 10,643,901
------------------------------
- -----------------------------------------------------------------------------------------------
Net Capital Contributions:
Increase in net assets derived from net capital contributions 57,366,685 334,730,219
------------------------------
- -----------------------------------------------------------------------------------------------
Net Assets:
Total increase in net assets 141,459,823 345,374,120
Beginning of period 345,374,120 --
------------------------------
End of period $486,833,943 $345,374,120
==============================
- -----------------------------------------------------------------------------------------------
</TABLE>
+ Commencement of operations.
See Notes to Financial Statements.
November 30, 1999 28 Mercury International Fund
<PAGE>
FINANCIAL HIGHLIGHTS
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
The following ratios have been derived from information provided in the
financial statements.
For the Six For the Period
Months Ended Oct. 30, 1998+
Nov. 30, 1999 to May 31, 1999
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses .86%* .95%*
=============================
Investment income--net .39%* 1.76%*
=============================
- --------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $486,834 $ 345,374
=============================
Portfolio turnover 23.89% 24.19%
=============================
- --------------------------------------------------------------------------------
* Annualized.
+ Commencement of operations.
See Notes to Financial Statements.
November 30, 1999 29 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MERCURY MASTER INTERNATIONAL PORTFOLIO
================================================================================
1 Significant Accounting Policies:
Mercury Master International Portfolio (the "Portfolio") is part of
Mercury Asset Management Master Trust (the "Trust"). The Trust is
registered under the Investment Company Act of 1940 and is organized as a
Delaware business trust. The Portfolio's financial statements are prepared
in accordance with generally accepted accounting principles, which may
require the use of management accruals and estimates. 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 contract, the Portfolio
deposits and maintains as collateral such ini tial 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
November 30, 1999 30 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
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.
(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.
November 30, 1999 31 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
(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.
(f) Custodian bank--The Portfolio recorded an amount payable to the
custodian bank reflecting an overnight overdraft which resulted from
management estimates of available cash.
2 Investment Advisory Agreement and Transactions with Affiliates:
The Trust has entered into an Investment Advisory Agreement with Mercury
Asset Management International Ltd. ("Mercury International"), an
affiliate of Fund Asset Management, L.P. ("FAM"). The general partner of
FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the limited
partner.
Mercury International is responsible for the management of the Portfolios'
investments and provides the necessary personnel, facilities, equipment
and certain other services necessary to the operations of the Portfolio.
For such services, the Portfolio pays a monthly fee at an annual rate of
.75% of the average daily value of the Portfolios' net assets. The Trust
has entered into a Sub-Advisory Agreement with FAM with respect to the
Portfolio, pursuant to which FAM provides investment advisory services
with respect to the Portfolio's daily cash assets. Mercury International
has agreed to pay FAM a fee in an amount to be determined from time to
time by both parties but in no event in excess of the amount that Mercury
International actually receives for providing services to the Trust
pursuant to the Investment Advisory Agreement.
In addition, Merrill Lynch, Pierce, Fenner & Smith Incorporated, a
subsidiary of ML & Co., received $3,905 in commissions on the execution of
portfolio security transactions for the Portfolio for the six months ended
November 30, 1999.
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.
November 30, 1999 32 Mercury International Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONCLUDED)
3 Investments:
Purchases and sales of investments, excluding short-term securities, for
the six months ended November 30, 1999 were $152,783,639 and $94,726,760,
respectively.
Net realized gains (losses) for the six months ended November 30, 1999 and
net unrealized gains (losses) as of November 30, 1999 were as follows:
Realized Unrealized
Gains (Losses) Gains (Losses)
==========================================================================
Long-term investments $10,270,699 $79,488,195
Foreign currency transactions (225,773) (9,773)
-----------------------------
Total $10,044,926 $79,478,422
=============================
--------------------------------------------------------------------------
As of November 30, 1999, net unrealized appreciation for Federal income
tax purposes aggregated $79,488,195, of which $96,478,107 related to
appreciated securities and $16,989,912 related to depreciated securities.
At November 30, 1999, the aggregate cost of investments for Federal income
tax purposes was $387,020,884.
4 Commitments:
O At November 30, 1999, the Portfolio had entered into foreign exchange
contracts under which it had agreed to sell various foreign currencies
with an approximate value of $5,285,000.
November 30, 1999 33 Mercury International Fund
<PAGE>
PORTFOLIO INFORMATION
WORLDWIDE INVESTMENTS AS OF NOVEMBER 30, 1999
================================================================================
Percent of
Ten Largest Holdings Net Assets
================================================================================
Mannesmann AG 4.7%
- --------------------------------------------------------------------------------
Nokia Oyj 2.6
- --------------------------------------------------------------------------------
Nippon Telegraph & Telephone
Corporation (NTT) 2.6
- --------------------------------------------------------------------------------
Glaxo Wellcome PLC 2.1
- --------------------------------------------------------------------------------
British Telecommunications PLC 2.0
- --------------------------------------------------------------------------------
Total Fina SA 'B' 1.9
- --------------------------------------------------------------------------------
Vodafone AirTouch PLC 1.8
- --------------------------------------------------------------------------------
NTT Mobile Communications
Network, Inc. 1.8
- --------------------------------------------------------------------------------
Siemens AG 1.8
- --------------------------------------------------------------------------------
BP Amoco PLC 1.6
- --------------------------------------------------------------------------------
Percent of
Ten Largest Countries Net Assets
================================================================================
Japan 26.3%
- --------------------------------------------------------------------------------
United Kingdom 19.4
- --------------------------------------------------------------------------------
Germany 9.6
- --------------------------------------------------------------------------------
France 8.6
- --------------------------------------------------------------------------------
Netherlands 7.2
- --------------------------------------------------------------------------------
Switzerland 4.7
- --------------------------------------------------------------------------------
Hong Kong 2.8
- --------------------------------------------------------------------------------
Sweden 2.7
- --------------------------------------------------------------------------------
Finland 2.6
- --------------------------------------------------------------------------------
Spain 2.6
- --------------------------------------------------------------------------------
Percent of
Ten Largest Industries Net Assets
================================================================================
Telecommunications 16.0%
- --------------------------------------------------------------------------------
Electrical & Electronics 10.2
- --------------------------------------------------------------------------------
Banking 10.2
- --------------------------------------------------------------------------------
Health & Personal Care 6.8
- --------------------------------------------------------------------------------
Insurance 6.7
- --------------------------------------------------------------------------------
Energy Sources 5.9
- --------------------------------------------------------------------------------
Merchandising 4.1
- --------------------------------------------------------------------------------
Food & Household Products 3.2
- --------------------------------------------------------------------------------
Appliances & Household Durables 2.9
- --------------------------------------------------------------------------------
Chemicals 2.8
- --------------------------------------------------------------------------------
November 30, 1999 34 Mercury International Fund
<PAGE>
OFFICERS AND DIRECTORS
Jeffrey M. Peek, Director and President
David O. Beim, Director
James T. Flynn, Director
W. Carl Kester, Director
Karen P. Robards, Director
Terry K. Glenn, Director and
Executive Vice President
Peter John Gibbs, Senior Vice President
Donald C. Burke, Vice President and
Treasurer
Robert E. Putney, III, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(888) 763-2260
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
The Fund seeks long-term capital growth through investments primarily in a
diversified portfolio of equity securities of companies located outside the
United States. The Fund will seek to achieve its objective by investing all of
its assets in Mercury Master International Portfolio of Mercury Asset Management
Master Trust, which has the same investment objective as the Fund. The Fund's
investment experience will correspond to the investment experience of the
Portfolio.
Mercury International Fund of
Mercury Asset Management Funds, Inc.
Box 9011
Princeton, NJ
08543-9011
[RECYCLE LOGO] Printed on post-consumer recycled paper MERCINTL--11/99
