SEMI-ANNUAL REPORT
NOVEMBER 30, 1999
Mercury
Pan-European [GRAPHIC OMITTED]
Growth
Fund
OF MERCURY ASSET
MANAGEMENT FUNDS, INC.
---------------------
M E R C U R Y
ASSET MANAGEMENT
---------------------
<PAGE>
MERCURY MASTER
PAN-EUROPEAN GROWTH PORTFOLIO
<TABLE>
<CAPTION>
INDUSTRY WEIGHTINGS RELATIVE TO THE MSCI EUROPE INDEX
=======================================================================================================
As of November 30, 1999 Portfolio Allocation Index Allocation Portfolio Versus Index
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CAPITAL EQUIPMENT
Aerospace & Military Technology 0.0% 0.5% - 0.5%
Construction & Housing 1.1 0.7 + 0.4
Data Processing & Reproduction 0.0 0.0 0.0
Electrical & Electronics 9.6 5.2 + 4.4
Electronic Components & Instruments 0.0 0.5 - 0.5
Energy Equipment & Services 0.0 0.1 - 0.1
Industrial Components 0.0 0.6 - 0.6
Machinery & Engineering 2.9 1.1 + 1.8
- -------------------------------------------------------------------------------------------------------
Total Capital Equipment 13.6 8.7 + 4.9
- -------------------------------------------------------------------------------------------------------
CONSUMER GOODS
Appliances & Household Durables 0.6 0.7 - 0.1
Automobiles 0.8 2.8 - 2.0
Beverages & Tobacco 1.6 1.9 - 0.3
Food & Household Products 3.1 3.5 - 0.4
Health & Personal Care 8.5 10.9 - 2.4
Recreation & Other Consumer Goods 0.0 0.9 - 0.9
Textiles & Apparel 0.0 0.1 - 0.1
- -------------------------------------------------------------------------------------------------------
Total Consumer Goods 14.6 20.8 - 6.2
- -------------------------------------------------------------------------------------------------------
ENERGY
Energy Sources 8.4 8.7 - 0.3
Utilities--Electric & Gas 2.6 4.4 - 1.8
- -------------------------------------------------------------------------------------------------------
Total Energy 11.0 13.1 - 2.1
- -------------------------------------------------------------------------------------------------------
FINANCE
Banking 14.1 15.3 - 1.2
Financial Services 0.0 1.3 - 1.3
Insurance 9.2 8.2 + 1.0
Real Estate 0.0 0.6 - 0.6
- -------------------------------------------------------------------------------------------------------
Total Finance 23.3 25.4 - 2.1
- -------------------------------------------------------------------------------------------------------
MATERIALS
Building Materials & Components 0.0 1.6 - 1.6
Chemicals 3.3 2.0 + 1.3
Forest Products & Paper 0.0 0.4 - 0.4
Metals/Non Ferrous 0.9 0.4 + 0.5
Metals--Steel 0.6 0.5 + 0.1
Miscellaneous Materials & Commodities 0.0 0.2 - 0.2
- -------------------------------------------------------------------------------------------------------
Total Materials 4.8 5.1 - 0.3
- -------------------------------------------------------------------------------------------------------
MULTI-INDUSTRY
Multi-Industry 1.0 0.9 + 0.1
- -------------------------------------------------------------------------------------------------------
Total Multi-Industry 1.0 0.9 + 0.1
- -------------------------------------------------------------------------------------------------------
SERVICES
Broadcasting & Publishing 4.7 1.5 + 3.2
Business/Public Services 5.7 4.9 + 0.8
Leisure/Tourism 1.5 1.3 + 0.2
Merchandising 4.6 4.7 - 0.1
Telecommunications 15.9 12.3 + 3.6
Transportation--Airlines 0.0 0.5 - 0.5
Transportation--Road & Rail 0.0 0.1 - 0.1
Transportation--Shipping 0.0 0.6 - 0.6
Wholesale & International Trade 0.0 0.1 - 0.1
- -------------------------------------------------------------------------------------------------------
Total Services 32.4 26.0 + 6.4
- -------------------------------------------------------------------------------------------------------
CASH/CASH EQUIVALENT -0.7 0.0 - 0.7
- -------------------------------------------------------------------------------------------------------
TOTAL 100.0% 100.0%
- -------------------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 2 Mercury Pan-European Growth Fund
<PAGE>
DEAR SHAREHOLDER
We are pleased to provide you with this semi-annual report to shareholders. For
the three months ended November 30, 1999, Mercury Pan-European Growth Fund's
Class I, Class A, Class B and Class C Shares had total returns of +5.21%,
+5.13%, +4.88% and +4.88%, respectively. This compares with the total return of
+5.65% for the unmanaged Morgan Stanley Capital International (MSCI) Europe
Index for the same three-month period. (Investment results shown do not reflect
sales charges and would be lower if sales charges were included. Complete
performance information can be found on pages 4 and 5 of this report to
shareholders.)
Investment Environment
European markets were very volatile over the three months ended November 30,
1999. The markets fell in September in anticipation of the prospects of higher
interest rates. However, this was offset by economic data that continued to
reflect a recovery; reported profits were in line with or exceeded expectations
and corporate activity remained at exceptionally high levels. Market volatility
persisted through October with moves of more than 3% each week. However, the
anticipated interest rate increase of 50 basis points (0.50%) by the European
Central Bank removed some of the uncertainty, and the markets rallied strongly
through the end of November. The MSCI Europe Index was up 5.7% in US dollar
terms for the quarter ended November 30, 1999.
The November quarter also saw volatility in the euro. Having started the period
at c1.06 against the US dollar, the euro rallied to c1.08 as investors became
concerned about the outlook for US dollar assets after a worse-than-expected
September US producer price index figure. However, subsequent data reassured
investors, and the dollar recovered and the euro fell to near parity with the US
dollar by November 30, 1999.
During the three months ended November 30, 1999, European economic data con
tinued to reflect a recovery. Both business and household confidence
strengthened further with the German IFO indicator (a measure of German business
confidence) at its highest level for two years. Unemployment across the Eurozone
(which is comprised of the 11 member countries of the European Monetary Union)
finally fell below 10%. Euro weakness also had a beneficial impact on European
exports over the November quarter.
There was a wide divergence in returns between European markets during the
November quarter. Telecommunications stocks performed strongly across the board,
and stock markets with a high exposure to the telecommunication sectors
benefited as a result. The best-performing market was Finland, up over 60% in
local currency terms. This was largely the result of a very strong performance
by Nokia Oyj. Telefonaktiebolaget LM Ericsson had a similar effect on the
Swedish market, which was up over 25% in local currency terms. France, Germany
and Spain also performed well. The worst-performing markets were Austria,
Belgium and Ireland, all of which have little or no telecommunications exposure.
As blue-chip stocks continued to outperform, these markets also suffered from
their low representation in the narrow European indexes.
November 30, 1999 3 Mercury Pan-European Growth Fund
<PAGE>
The European stock market continued to experience sector rotation. Some of this
was out of the more value focused areas and back into the growth-oriented
sector. Materials underperformed over the November quarter as did oil stocks,
which failed to keep up with the rise in the oil price. Electricals, electronics
and capital goods also under performed. However, some of the more growth-focused
areas of the market, such as broadcasting and publishing and healthcare
outperformed.
Corporate activity remained exceptionally strong. During the third calendar
quarter of 1999, transactions announced in Europe were greater than those
announced in the United States for the first time in seven years. Activity
centered on the telecommunications sector with France Telecom SA set to acquire
E-Plus Mobilfunk GmbH and Mannesmann AG bidding for Orange PLC. This was
followed by a bid for Mannesmann AG by Vodafone AirTouch PLC. However, plans by
the Olivetti Group SpA to transfer control of Telecom Italia Mobile SpA to
Tecnost SpA from Telecom Italia SpA on terms that would disadvantage Telecom
Italia's shareholders were viewed negatively by investors. Telecom Italia
recovered strongly when these plans were subsequently abandoned. Plans were also
announced by Novartis AG and AstraZeneca Group PLC to merge and eventually float
their agrichemicals businesses.
Portfolio Matters
During the quarter ended November 30, 1999, the Portfolio benefited from its
holdings in telecommunications equipment manufacturers such as Ericsson and
Nokia. However, we were underweight in network operators, which limited upside
results since this group outperformed substantially over the period. The
Portfolio's holdings in Dutch publishers and German utilities also
underperformed.
During the November quarter, we increased our holdings in both Mannesmann and
Vodafone when short-term weakness provided buying opportunities. We also reduced
our holdings in pharmaceuticals with sales of SmithKline Beecham PLC and Glaxo
Wellcome PLC. Part of the proceeds realized were reinvested into
Sanofi-Synthelabo SA. We eliminated our holding in Societe Generale and
purchased Bank of Ireland in the financial sector.
Investment Outlook
Although the approach of Year 2000 (Y2K) may restrict corporate activity and
market liquidity at year-end, investors have shrugged off these concerns.
Economic activity continues to reflect a recovery, and the outlook for profits
remains good. In the absence of Y2K-related problems, or weakness in security
markets worldwide, we believe that the long-term outlook for European equities
remains favorable.
November 30, 1999 4 Mercury Pan-European Growth Fund
<PAGE>
In Conclusion
We thank you for your investment in Mercury Pan-European Growth Fund, and we
look forward to serving your investment needs in the months and years ahead.
Sincerely,
/s/ Jeffrey Peek /s/ Andreas E.F. Utermann
Jeffrey Peek Andreas E.F. Utermann
President Portfolio Manager
January 7, 2000
- --------------------------------------------------------------------------------
To reduce shareholder expenses, Mercury Pan-European Growth 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.
November 30, 1999 5 Mercury Pan-European Growth Fund
<PAGE>
FUND PERFORMANCE DATA (CONCLUDED)
CLASS C SHARES are subject to a distribution fee of 0.75% and an account
maintenance fee of 0.25%. In addition, Class C shares may be subject to a 1%
contingent deferred sales charge if redeemed within one year after purchase.
None of the past results shown should be considered a representation of future
performance. Figures shown in the "Recent Performance Results" and "Aggregate
Total Return" tables assume reinvestment of all dividends and capital gains
distributions at net asset value on the ex-dividend date. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Dividends paid to each class of
shares will vary because of the different levels of account maintenance,
distribution and transfer agency fees applicable to each class, which are
deducted from the income available to be paid to shareholders.
AGGREGATE TOTAL RETURN
================================================================================
% Return % Return
Without Sales With Sales
Class I Shares* Charge Charge**
- --------------------------------------------------------------------------------
Inception (10/30/98)
through 9/30/99 +5.40% -0.13%
- --------------------------------------------------------------------------------
* 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 +5.20% -0.32%
- --------------------------------------------------------------------------------
* 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 +4.50% +0.50%
- --------------------------------------------------------------------------------
* 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 +4.40% +3.40%
- --------------------------------------------------------------------------------
* 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 +5.21% +10.24% +13.00%
- --------------------------------------------------------------------------------
Class A +5.13 +10.06 +12.70
- --------------------------------------------------------------------------------
Class B +4.88 + 9.08 +11.70
- --------------------------------------------------------------------------------
Class C +4.88 + 9.08 +11.70
- --------------------------------------------------------------------------------
* Investment results shown do not reflect sales charges; results shown would
be lower if a sales charge was included. Total investment returns are
based on changes in net asset values for the periods shown, and assume
reinvestment of all dividends and capital gains distributions at net asset
value on the ex-dividend date. The Fund's inception date is 10/30/98.
November 30, 1999 6 Mercury Pan-European Growth Fund
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
As of November 30, 1999
- --------------------------------------------------------------------------------
MERCURY PAN-EUROPEAN GROWTH FUND
================================================================================
Assets:
Investment in Mercury Master Pan-European Growth Portfolio,
at value (identified cost--$484,429,851) $535,180,784
Prepaid registration fees 129,491
------------
Total assets 535,310,275
------------
- --------------------------------------------------------------------------------
Liabilities:
Payable to distributor 392,803
Payable to administrator 14,804
Accrued expenses 284,295
------------
Total liabilities 691,902
------------
- --------------------------------------------------------------------------------
Net Assets:
Net assets $534,618,373
============
- --------------------------------------------------------------------------------
Net Assets Consist of:
Class I Shares of Common Stock, $.0001 par value,
100,000,000 shares authorized $ 328
Class A Shares of Common Stock, $.0001 par value,
100,000,000 shares authorized 586
Class B Shares of Common Stock, $.0001 par value,
100,000,000 shares authorized 2,630
Class C Shares of Common Stock, $.0001 par value,
100,000,000 shares authorized 1,232
Paid-in capital in excess of par 476,300,506
Undistributed investment income--net 268,942
Undistributed realized capital gains on investments and
foreign currency transactions from the Portfolio--net 7,293,216
Unrealized appreciation on investments and foreign
currency transactions from the Portfolio--net 50,750,933
------------
Net assets $534,618,373
============
- --------------------------------------------------------------------------------
Net Asset Value:
Class I--Based on net assets of $37,040,521 and 3,278,313
shares outstanding $ 11.30
============
Class A--Based on net assets of $66,023,141 and 5,859,388
shares outstanding $ 11.27
============
Class B--Based on net assets of $293,908,008 and 26,301,844
shares outstanding $ 11.17
============
Class C--Based on net assets of $137,646,703 and 12,318,190
shares outstanding $ 11.17
============
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
November 30, 1999 7 Mercury Pan-European Growth Fund
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended November 30, 1999
- --------------------------------------------------------------------------------
MERCURY PAN-EUROPEAN GROWTH FUND
================================================================================
<TABLE>
<S> <C> <C>
Investment Income:
Investment income allocated from the Portfolio (net of
$540,198 foreign withholding tax) $ 4,097,544
Expenses allocated from the Portfolio (2,398,603)
------------
Net investment income from the Portfolio 1,698,941
------------
- -------------------------------------------------------------------------------------------
Expenses:
Account maintenance and distribution fees--Class B $ 1,474,495
Account maintenance and distribution fees--Class C 722,188
Administration fee 697,195
Transfer agent fees--Class B 169,385
Account maintenance fees--Class A 98,749
Transfer agent fees--Class C 85,165
Registration fees 64,862
Printing and shareholder reports 62,523
Transfer agent fees--Class A 37,431
Transfer agent fees--Class I 18,659
Professional fees 11,155
Accounting services 1,337
-----------
Total expenses 3,443,144
------------
Investment loss--net (1,744,203)
------------
- -------------------------------------------------------------------------------------------
Realized & Unrealized Gain (Loss) from the Portfolio--Net:
Realized gain (loss) from the Portfolio on:
Investments--net 2,422,344
Foreign currency transactions--net (151,740) 2,270,604
-----------
Changes in unrealized appreciation on investments and foreign
currency transactions from the Portfolio--net 47,014,852
------------
Net realized and unrealized gain on investments and foreign
currency transactions from the Portfolio 49,285,456
------------
Net Increase in Net Assets Resulting from Operations $ 47,541,253
============
- -------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
November 30, 1999 8 Mercury Pan-European Growth Fund
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS
MERCURY PAN-EUROPEAN GROWTH 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 $ (1,744,203) $ 1,734,186
Realized gain on investments and foreign currency
transactions from the Portfolio--net 2,270,604 5,212,570
Change in unrealized appreciation on investments and foreign
currency transactions from the Portfolio--net 47,014,852 3,736,081
---------------------------------
Net increase in net assets resulting from operations 47,541,253 10,682,837
---------------------------------
- ---------------------------------------------------------------------------------------------------
Capital Share Transactions:
Net increase (decrease) in net assets derived from capital
share transactions (65,358,944) 541,603,227
---------------------------------
- ---------------------------------------------------------------------------------------------------
Net Assets:
Total increase (decrease) in net assets (17,817,691) 552,286,064
Beginning of period 552,436,064 150,000
---------------------------------
End of period* $ 534,618,373 $ 552,436,064
=================================
- ---------------------------------------------------------------------------------------------------
* Undistributed investment income--net $ 268,942 $ 2,013,145
=================================
+ Commencement of operations.
</TABLE>
See Notes to Financial Statements.
November 30, 1999 9 Mercury Pan-European Growth Fund
<PAGE>
FINANCIAL HIGHLIGHTS
MERCURY PAN-EUROPEAN GROWTH FUND
================================================================================
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
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
- --------------------------------------------------------------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 10.31 $ 10.00
-------------------------------
Investment income--net .01 .08
Realized and unrealized gain on investments
and foreign currency transactions from
the Portfolio--net .98 .23
-------------------------------
Total from investment operations .99 .31
-------------------------------
Net asset value, end of period $ 11.30 $ 10.31
===============================
- --------------------------------------------------------------------------------
Total Investment Return:**
Based on net asset value per share 9.60%++ 3.10%++++
===============================
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses+++ 1.26%* 1.41%*
===============================
Investment income--net .23%* 1.42%*
===============================
- --------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 37,040 $ 39,781
===============================
- --------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Commencement of operations.
++ Based on average shares outstanding.
+++ 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 Pan-European Growth Fund
<PAGE>
FINANCIAL HIGHLIGHTS
(CONTINUED)
MERCURY PAN-EUROPEAN GROWTH FUND
================================================================================
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
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
- --------------------------------------------------------------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 10.30 $ 10.00
-------------------------------
Investment income--net --+++++ .07
Realized and unrealized gain on investments
and foreign currency transactions from
the Portfolio--net .97 .23
-------------------------------
Total from investment operations .97 .30
-------------------------------
Net asset value, end of period $ 11.27 $ 10.30
===============================
- --------------------------------------------------------------------------------
Total Investment Return:**
Based on net asset value per share 9.42%++++ 3.00%++++
===============================
- --------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses+++ 1.51%* 1.66%*
===============================
Investment income--net .01%* 1.05%*
===============================
- --------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 66,023 $ 83,316
===============================
- --------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Commencement of operations.
++ Based on average shares outstanding.
+++ 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 11 Mercury Pan-European Growth Fund
<PAGE>
FINANCIAL HIGHLIGHTS
(CONTINUED)
MERCURY PAN-EUROPEAN GROWTH FUND
================================================================================
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
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
- -----------------------------------------------------------------------------------
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 10.25 $ 10.00
----------------------------------
Investment income (loss)--net (.04) .02
Realized and unrealized gain on investments
and foreign currency transactions from
the Portfolio--net .96 .23
----------------------------------
Total from investment operations .92 .25
----------------------------------
Net asset value, end of period $ 11.17 $ 10.25
==================================
- -----------------------------------------------------------------------------------
Total Investment Return:**
Based on net asset value per share 8.98%++++ 2.50%++++
==================================
- -----------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses+++ 2.28%* 2.43%*
==================================
Investment income (loss)--net (.82%)* .36%*
==================================
- -----------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 293,908 $ 286,612
==================================
- -----------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Commencement of operations.
++ Based on average shares outstanding.
+++ 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 Pan-European Growth Fund
<PAGE>
FINANCIAL HIGHLIGHTS
(CONCLUDED)
MERCURY PAN-EUROPEAN GROWTH FUND
================================================================================
The following per share data and ratios have been derived from information
provided in the financial statements.
<TABLE>
<CAPTION>
Class C
----------------------------------
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>
Per Share Operating Performance:
Net asset value, beginning of period $ 10.25 $ 10.00
----------------------------------
Investment income (loss)--net (.04) .02
Realized and unrealized gain on investments
and foreign currency transactions from
the Portfolio--net .96 .23
----------------------------------
Total from investment operations .92 .25
----------------------------------
Net asset value, end of period $ 11.17 $ 10.25
==================================
- -----------------------------------------------------------------------------------
Total Investment Return:**
Based on net asset value per share 8.98%++++ 2.50%++++
==================================
- -----------------------------------------------------------------------------------
Ratios to Average Net Assets:
Expenses+++ 2.28%* 2.43%*
==================================
Investment income (loss)--net (.81%)* .35%*
==================================
- -----------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 137,647 $ 142,727
==================================
- -----------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Total investment returns exclude the effects of sales charges.
+ Commencement of operations.
++ Based on average shares outstanding.
+++ Includes the Fund's share of the Portfolio's allocated expenses.
++++ Aggregate total investment return.
See Notes to Financial Statements.
November 30, 1999 13 Mercury Pan-European Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MERCURY PAN-EUROPEAN GROWTH FUND
================================================================================
1 Significant Accounting Policies:
Mercury Pan-European Growth 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 Pan-European Growth
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. 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's financial statements are prepared in accordance with generally
accepted accounting principles, which may require the use of management
accruals and estimates. 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 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 14 Mercury Pan-European Growth 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 15 Mercury Pan-European Growth 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 I and Class A
Shares as follows:
MFD MLPF&S
==========================================================================
Class I $ -- $ 13
--------------------------------------------------------------------------
Class A $ 3,994 $72,848
--------------------------------------------------------------------------
For the six months ended November 30, 1999, MLPF&S received contingent
deferred sales charges of $779,276 and $119,367 relating to transactions
in Class B and Class C Shares, respectively.
Furthermore, MLPF&S received contingent deferred sales charges of $5,323
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 $2,163,413 and $71,163,756,
respectively.
4 Capital Share Transactions:
Net increase (decrease) in net assets derived from capital share
transactions were ($65,358,944) and $541,603,227 for the six months ended
November 30, 1999 and for the period October 30, 1998 to May 31, 1999.
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 537,580 $ 5,748,688
Shares redeemed (1,117,214) (12,034,888)
-------------------------------
Net decrease (579,634) $ (6,286,200)
===============================
--------------------------------------------------------------------------
Class I Shares for the Period
October 30, 1998+ to May 31, 1999 Shares Dollar Amount
==========================================================================
Shares sold 4,955,745 $ 50,769,993
Shares redeemed (1,101,548) (11,585,701)
-------------------------------
Net increase 3,854,197 $ 39,184,292
===============================
--------------------------------------------------------------------------
+ Prior to October 30, 1998 (commencement of operations), the Fund issued
3,750 shares to Mercury International for $37,500.
November 30, 1999 16 Mercury Pan-European Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONCLUDED)
Class A Shares for the Six Months Ended
November 30, 1999 Shares Dollar Amount
==========================================================================
Shares sold 236,176 $ 2,526,588
Shares redeemed (2,468,436) (26,587,259)
---------------------------------
Net decrease (2,232,260) $(24,060,671)
=================================
--------------------------------------------------------------------------
Class A Shares for the Period
October 30, 1998+ to May 31, 1999 Shares Dollar Amount
==========================================================================
Shares sold 10,324,602 $103,931,685
Shares redeemed (2,236,704) (23,289,859)
---------------------------------
Net increase 8,087,898 $ 80,641,826
=================================
--------------------------------------------------------------------------
+ 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 870,284 $ 9,272,745
Shares redeemed (2,528,035) (27,028,657)
---------------------------------
Net decrease (1,657,751) $(17,755,912)
=================================
--------------------------------------------------------------------------
Class B Shares for the Period
October 30, 1998+ to May 31, 1999 Shares Dollar Amount
==========================================================================
Shares sold 29,837,631 $301,081,394
Shares redeemed (1,881,787) (19,635,007)
---------------------------------
Net increase 27,955,844 $281,446,387
=================================
--------------------------------------------------------------------------
+ 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 353,841 $ 3,765,553
Shares redeemed (1,959,048) (21,021,714)
---------------------------------
Net decrease (1,605,207) $(17,256,161)
=================================
--------------------------------------------------------------------------
Class C Shares for the Period
October 30, 1998+ to May 31, 1999 Shares Dollar Amount
==========================================================================
Shares sold 15,587,252 $157,781,489
Shares redeemed (1,667,606) (17,450,767)
---------------------------------
Net increase 13,919,646 $140,330,722
=================================
--------------------------------------------------------------------------
+ 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 Corporation's Board of Directors declared an
ordinary income dividend in the amount of $.206185 per Class I Share,
$.183645 per Class A Share, $.142574 per Class B Share and $.137595 per
Class C Share payable on December 16, 1999 to shareholders of record as of
December 8, 1999.
November 30, 1999 17 Mercury Pan-European Growth Fund
<PAGE>
SCHEDULE OF INVESTMENTS
MERCURY MASTER PAN-EUROPEAN GROWTH PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
In US Dollars
---------------------------
Shares Percent of
Industries Held Investments Value Net Assets
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Appliances & Household Durables
Sweden 160,000 Electrolux AB 'B' $ 3,125,441 0.6%
- -----------------------------------------------------------------------------------------------
Total Investments in
Appliances & Household Durables 3,125,441 0.6
- -----------------------------------------------------------------------------------------------
Automobiles
Germany 64,000 DaimlerChrysler AG
(Registered Shares) 4,355,820 0.8
- -----------------------------------------------------------------------------------------------
Total Investments in Automobiles 4,355,820 0.8
- -----------------------------------------------------------------------------------------------
Banking
France 88,000 Banque Nationale de Paris (BNP) 8,062,454 1.5
- -----------------------------------------------------------------------------------------------
Germany 43,000 Deutsche Bank AG (Registered Shares) 2,833,488 0.5
73,000 HypoVereinsbank 4,527,378 0.9
---------------------------
7,360,866 1.4
- -----------------------------------------------------------------------------------------------
Ireland 600,000 Bank of Ireland 4,938,354 0.9
- -----------------------------------------------------------------------------------------------
Italy 1,200,000 Banca Intesa SpA 5,122,598 1.0
800,000 Unicredito Italiano SpA 3,729,187 0.7
---------------------------
8,851,785 1.7
- -----------------------------------------------------------------------------------------------
Spain 550,000 Banco Santander Central
Hispano, SA 6,041,303 1.1
- -----------------------------------------------------------------------------------------------
Sweden 860,000 Nordbanken Holding AB 5,161,214 1.0
- -----------------------------------------------------------------------------------------------
Switzerland 130,000 Safra Republic Holdings, SA 8,970,000 1.7
32,000 UBS AG (Registered Shares) 8,751,415 1.6
---------------------------
17,721,415 3.3
- -----------------------------------------------------------------------------------------------
United Kingdom 170,000 Barclays PLC 4,897,969 0.9
465,000 HSBC Holdings PLC 5,991,814 1.1
500,000 Lloyds TSB Group PLC 6,387,097 1.2
---------------------------
17,276,880 3.2
- -----------------------------------------------------------------------------------------------
Total Investments in Banking 75,414,271 14.1
- -----------------------------------------------------------------------------------------------
Beverages & Tobacco
France 11,000 LVMH (Louis Vuitton Moet Hennessy) 3,568,301 0.7
- -----------------------------------------------------------------------------------------------
United Kingdom 565,000 Diageo PLC 5,108,404 0.9
- -----------------------------------------------------------------------------------------------
Total Investments in
Beverages & Tobacco 8,676,705 1.6
- -----------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 18 Mercury Pan-European Growth 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>
Broadcasting & Publishing
Belgium 63,000 Compagnie Luxembourgeoise pour
l'Audio-Visuel et la Finance
(Audiofina) $ 3,396,591 0.6%
- -----------------------------------------------------------------------------------------------
Italy 2,380,000 Seat Pagine Gialle SpA 4,840,292 0.9
- -----------------------------------------------------------------------------------------------
Netherlands 150,000 VNU NV 5,942,637 1.1
170,000 Wolters Kluwer NV 'A' 5,126,122 1.0
---------------------------
11,068,759 2.1
- -----------------------------------------------------------------------------------------------
United Kingdom 940,000 Reed International PLC 5,872,946 1.1
- -----------------------------------------------------------------------------------------------
Total Investments in
Broadcasting & Publishing 25,178,588 4.7
- -----------------------------------------------------------------------------------------------
Building Materials & Components
Germany 40,000 Heidelberger Zement AG 2,911,666 0.5
- -----------------------------------------------------------------------------------------------
Total Investments in Building
Materials & Components 2,911,666 0.5
- -----------------------------------------------------------------------------------------------
Business/Public Services
Denmark 20,929 + ISS International Service
System A/S 'B' 1,218,301 0.2
- -----------------------------------------------------------------------------------------------
France 21,000 Cap Gemini SA 3,712,676 0.7
88,000 Vivendi 6,999,274 1.3
---------------------------
10,711,950 2.0
- -----------------------------------------------------------------------------------------------
Spain 287,000 Autopistas, Concesionaria
Espanola SA 2,938,638 0.6
- -----------------------------------------------------------------------------------------------
Switzerland 4,759 Adecco SA (Registered Shares) 3,042,816 0.6
- -----------------------------------------------------------------------------------------------
United Kingdom 300,000 BAA PLC 2,117,890 0.4
515,000 Compass Group PLC 6,230,305 1.2
270,000 Hays PLC 3,975,520 0.7
---------------------------
12,323,715 2.3
- -----------------------------------------------------------------------------------------------
Total Investments in
Business/Public Services 30,235,420 5.7
- -----------------------------------------------------------------------------------------------
Chemicals
Germany 330,000 Bayer AG 13,954,248 2.6
- -----------------------------------------------------------------------------------------------
Netherlands 90,000 Akzo Nobel NV 3,851,010 0.7
- -----------------------------------------------------------------------------------------------
Total Investments in Chemicals 17,805,258 3.3
- -----------------------------------------------------------------------------------------------
Construction & Housing
Germany 84,139 Hochtief AG 3,193,610 0.6
- -----------------------------------------------------------------------------------------------
Total Investments in
Construction & Housing 3,193,610 0.6
- -----------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 19 Mercury Pan-European Growth 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>
Electrical & Electronics
Finland 127,000 Nokia Oyj $ 17,977,622 3.4%
- -----------------------------------------------------------------------------------------------
France 25,000 + Atos SA 3,901,350 0.7
- -----------------------------------------------------------------------------------------------
Germany 128,000 Siemens AG 12,899,927 2.4
- -----------------------------------------------------------------------------------------------
Netherlands 42,000 Koninklijke (Royal) Philips
Electronics NV 5,110,215 1.0
- -----------------------------------------------------------------------------------------------
Sweden 232,000 Telefonaktiebolaget LM Ericsson 'B' 11,261,473 2.1
- -----------------------------------------------------------------------------------------------
Total Investments in
Electrical & Electronics 51,150,587 9.6
- -----------------------------------------------------------------------------------------------
Energy Sources
France 1 Elf Aquitaine SA 156 0.0
95,000 Total Fina SA 'B' 12,634,837 2.4
---------------------------
12,634,993 2.4
- -----------------------------------------------------------------------------------------------
Italy 530,000 ENI SpA 2,902,806 0.5
- -----------------------------------------------------------------------------------------------
United 1,576,000 BP Amoco PLC 16,005,358 3.0
Kingdom 1,760,000 Shell Transport & Trading Company 13,503,558 2.5
---------------------------
29,508,916 5.5
- -----------------------------------------------------------------------------------------------
Total Investments in Energy Sources 45,046,715 8.4
- -----------------------------------------------------------------------------------------------
Food & Household Products
Netherlands 129,000 Koninklijke Numico NV 4,740,518 0.9
- -----------------------------------------------------------------------------------------------
Switzerland 4,100 Nestle SA (Registered Shares) 7,377,216 1.4
- -----------------------------------------------------------------------------------------------
United Kingdom 610,000 Unilever PLC 4,447,171 0.8
- -----------------------------------------------------------------------------------------------
Total Investments in
Food & Household Products 16,564,905 3.1
- -----------------------------------------------------------------------------------------------
Health & Personal Care
France 5,000 L'Oreal SA 3,289,719 0.6
84,000 + Sanofi-Synthelabo SA 3,458,962 0.6
---------------------------
6,748,681 1.2
- -----------------------------------------------------------------------------------------------
Switzerland 5,600 Novartis AG (Registered Shares) 8,727,776 1.6
800 Roche Holding AG 9,656,733 1.8
---------------------------
18,384,509 3.4
- -----------------------------------------------------------------------------------------------
United Kingdom 130,000 AstraZeneca Group PLC 5,790,013 1.1
300,000 Glaxo Wellcome PLC 8,968,201 1.7
430,000 SmithKline Beecham PLC 5,735,892 1.1
---------------------------
20,494,106 3.9
- -----------------------------------------------------------------------------------------------
Total Investments in
Health & Personal Care 45,627,296 8.5
- -----------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 20 Mercury Pan-European Growth 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>
Insurance
Belgium 220,000 Fortis 'B' $ 7,581,808 1.4%
- -----------------------------------------------------------------------------------------------
France 55,000 Axa 7,414,579 1.4
- -----------------------------------------------------------------------------------------------
Germany 17,500 Allianz AG (Registered Shares) 5,122,724 0.9
10,754 Marschollek, Lautenschlaeger
und Partner AG 3,031,596 0.6
---------------------------
8,154,320 1.5
- -----------------------------------------------------------------------------------------------
Italy 94,000 Assicurazioni Generali 2,706,681 0.5
- -----------------------------------------------------------------------------------------------
Netherlands 60,000 Aegon NV 5,436,720 1.0
160,000 ING Groep NV 8,996,765 1.7
---------------------------
14,433,485 2.7
- -----------------------------------------------------------------------------------------------
United Kingdom 450,000 Allied Zurich PLC 5,436,793 1.0
575,000 Royal & Sun Alliance Insurance
Group PLC 3,528,424 0.7
---------------------------
8,965,217 1.7
- -----------------------------------------------------------------------------------------------
Total Investments in Insurance 49,256,090 9.2
- -----------------------------------------------------------------------------------------------
Leisure/Tourism
France 36,000 Accor SA 8,169,578 1.5
- -----------------------------------------------------------------------------------------------
Total Investments in Leisure/Tourism 8,169,578 1.5
- -----------------------------------------------------------------------------------------------
Machinery & Engineering
France 52,000 Sidel SA 4,879,355 0.9
- -----------------------------------------------------------------------------------------------
Sweden 155,000 Atlas Copco AB 'A' 4,012,709 0.8
- -----------------------------------------------------------------------------------------------
Switzerland 36,000 + ABB Ltd. 3,559,034 0.7
124 Lindt & Sprungli AG 'R' 2,939,017 0.5
---------------------------
6,498,051 1.2
- -----------------------------------------------------------------------------------------------
Total Investments in
Machinery & Engineering 15,390,115 2.9
- -----------------------------------------------------------------------------------------------
Merchandising
Belgium 80,000 Delhaize "Le Lion" SA 6,121,344 1.1
- -----------------------------------------------------------------------------------------------
France 20,000 Carrefour SA 3,483,528 0.7
39,000 Pinault-Printemps-Redoute SA 8,127,896 1.5
---------------------------
11,611,424 2.2
- -----------------------------------------------------------------------------------------------
United 860,000 Safeway PLC 2,525,709 0.5
Kingdom 1,700,000 Tesco PLC 4,586,772 0.8
---------------------------
7,112,481 1.3
- -----------------------------------------------------------------------------------------------
Total Investments in Merchandising 24,845,249 4.6
- -----------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 21 Mercury Pan-European Growth 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>
Metals/Non-Ferrous
United Kingdom 240,000 Rio Tinto PLC (Registered Shares) $ 4,698,994 0.9%
- -----------------------------------------------------------------------------------------------
Total Investments in
Metals/Non-Ferrous 4,698,994 0.9
- -----------------------------------------------------------------------------------------------
Metals--Steel
France 215,000 Usinor SA 3,290,222 0.6
- -----------------------------------------------------------------------------------------------
Total Investments in Metals--Steel 3,290,222 0.6
- -----------------------------------------------------------------------------------------------
Multi--Industry
United 1,110,000 Invensys PLC 5,159,342 1.0
Kingdom
- -----------------------------------------------------------------------------------------------
Total Investments in Multi--Industry 5,159,342 1.0
- -----------------------------------------------------------------------------------------------
Telecommunications
Germany 125,000 Deutsche Telekom AG 7,154,572 1.3
82,000 Mannesmann AG 17,039,889 3.2
---------------------------
24,194,461 4.5
- -----------------------------------------------------------------------------------------------
Greece 160,000 Hellenic Telecommunications
Organization SA (OTE) 3,428,571 0.6
- -----------------------------------------------------------------------------------------------
Italy 1,170,000 Telecom Italia Mobile (TIM) SpA 4,582,249 0.9
925,000 Telecom Italia SpA (Registered) 4,982,401 0.9
---------------------------
9,564,650 1.8
- -----------------------------------------------------------------------------------------------
Portugal 264,000 Telecel-Comunicacoes Pessoais, SA 3,492,549 0.7
- -----------------------------------------------------------------------------------------------
Spain 525,000 + Telefonica SA 10,930,828 2.1
10,500 + Telefonica SA (New) 201,174 0.0
---------------------------
11,132,002 2.1
- -----------------------------------------------------------------------------------------------
United 660,000 British Telecommunications PLC 13,221,650 2.5
Kingdom 595,000 + Cable & Wireless Communications PLC 6,686,674 1.2
2,800,000 Vodafone AirTouch PLC 13,159,411 2.5
---------------------------
33,067,735 6.2
- -----------------------------------------------------------------------------------------------
Total Investments in
Telecommunications 84,879,968 15.9
- -----------------------------------------------------------------------------------------------
</TABLE>
November 30, 1999 22 Mercury Pan-European Growth 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>
Utilities--Electric & Gas
Belgium 16,000 Electrabel SA $ 5,103,268 0.9%
- -------------------------------------------------------------------------------------------------
Germany 100,000 Veba AG 4,882,980 0.9
- -------------------------------------------------------------------------------------------------
Spain 210,000 Endesa SA 4,165,132 0.8
- -------------------------------------------------------------------------------------------------
Total Investments in Utilities--
Electric & Gas 14,151,380 2.6
- -------------------------------------------------------------------------------------------------
Total Investments
(Cost--$488,335,536) 539,127,220 100.7
Liabilities in Excess of Other Assets (3,946,322) (0.7)
---------------------------
Net Assets $535,180,898 100.0%
===========================
- -------------------------------------------------------------------------------------------------
</TABLE>
+ Non-income producing security.
See Notes to Financial Statements.
November 30, 1999 23 Mercury Pan-European Growth Fund
<PAGE>
STATEMENT OF ASSETS
AND LIABILITIES
As of November 30, 1999
- --------------------------------------------------------------------------------
MERCURY MASTER PAN-EUROPEAN GROWTH PORTFOLIO
================================================================================
<TABLE>
<S> <C> <C>
Assets:
Investments, at value (identified cost--$488,335,536) $539,127,220
Receivables:
Dividends $ 1,216,304
Contributions 258,233 1,474,537
------------
Prepaid expenses 6,175
------------
Total assets 540,607,932
------------
- -------------------------------------------------------------------------------------------
Liabilities:
Payables:
Custodian bank 3,446,778
Withdrawals 1,227,402
Securities purchased 520,687
Investment adviser 44,462 5,239,329
------------
Accrued expenses 187,705
------------
Total liabilities 5,427,034
------------
- -------------------------------------------------------------------------------------------
Net Assets:
Net assets $535,180,898
============
- -------------------------------------------------------------------------------------------
Net Assets Consist of:
Partners' capital $484,429,954
Unrealized appreciation on investments and foreign currency
transactions--net 50,750,944
------------
Net assets $535,180,898
============
- -------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
November 30, 1999 24 Mercury Pan-European Growth Fund
<PAGE>
STATEMENT OF OPERATIONS
For the Six Months Ended November 30, 1999
- --------------------------------------------------------------------------------
MERCURY MASTER PAN-EUROPEAN GROWTH PORTFOLIO
================================================================================
<TABLE>
<S> <C> <C>
Investment Income:
Dividends (net of $540,198 foreign withholding tax) $ 4,052,157
Interest and discount earned 45,387
------------
Total income 4,097,544
------------
- --------------------------------------------------------------------------------------------
Expenses:
Investment advisory fees $ 2,093,272
Custodian fees 223,088
Accounting services 33,569
Professional fees 31,487
Trustees' fees and expenses 14,704
Other 2,483
------------
Total expenses 2,398,603
------------
Investment income--net 1,698,941
------------
- --------------------------------------------------------------------------------------------
Realized & Unrealized Gain (Loss) on Investments &
Foreign Currency Transactions--Net:
Realized gain (loss) from:
Investments--net 2,422,344
Foreign currency transactions--net (151,740) 2,270,604
------------
Change in unrealized appreciation/depreciation on:
Investments--net 46,938,530
Foreign currency transactions--net 76,333 47,014,863
-----------------------------
Net realized and unrealized gain on investments and foreign
currency transactions 49,285,467
------------
Net Increase in Net Assets Resulting from Operations $ 50,984,408
============
- --------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
November 30, 1999 25 Mercury Pan-European Growth Fund
<PAGE>
STATEMENTS OF CHANGES
IN NET ASSETS
MERCURY MASTER PAN-EUROPEAN GROWTH PORTFOLIO
================================================================================
<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--net $ 1,698,941 $ 6,010,445
Realized gain on investments and foreign currency
transactions--net 2,270,604 5,212,573
Change in unrealized appreciation/depreciation on
investments and foreign currency transactions--net 47,014,863 3,736,081
---------------------------------
Net increase in net assets resulting from operations 50,984,408 14,959,099
---------------------------------
- -------------------------------------------------------------------------------------------
Net Capital Contributions:
Increase (decrease) in net assets derived from net
capital contributions (69,000,343) 538,237,734
---------------------------------
- -------------------------------------------------------------------------------------------
Net Assets:
Total increase (decrease) in net assets (18,015,935) 553,196,833
Beginning of period 553,196,833 --
---------------------------------
End of period $ 535,180,898 $ 553,196,833
=================================
- -------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements.
FINANCIAL HIGHLIGHTS
MERCURY MASTER PAN-EUROPEAN GROWTH PORTFOLIO
================================================================================
<TABLE>
<CAPTION>
The following ratios have been derived from information For the Six For the Period
provided in the financial statements. Months Ended Oct. 30, 1998+
Nov. 30, 1999 to May 31, 1999
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Ratios to Average Net Assets:
Expenses .86%* .89%*
=================================
Investment income--net .61%* 1.88%*
=================================
- -------------------------------------------------------------------------------------------
Supplemental Data:
Net assets, end of period (in thousands) $ 535,181 $ 553,197
=================================
Portfolio turnover 25.83% 18.95%
=================================
- -------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
+ Commencement of operations.
See Notes to Financial Statements.
November 30, 1999 26 Mercury Pan-European Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MERCURY MASTER PAN-EUROPEAN GROWTH PORTFOLIO
================================================================================
1 Significant Accounting Policies:
Mercury Master Pan-European Growth 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 27 Mercury Pan-European Growth 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
Portfolio's 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 28 Mercury Pan-European Growth 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 as a result of the stated overdrawn balance. This overdrawn
balance was due to an unpaid corporate event.
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 Portfolio's
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 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.
Accounting services are provided to the Portfolio by FAM at cost.
In addition, MLPF&S received $25,724 in commissions on the execution of
portfolio security transactions for the Portfolio for the six months ended
November 30, 1999.
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 six months ended November 30, 1999, were $139,946,781 and
$194,677,686, respectively.
November 30, 1999 29 Mercury Pan-European Growth Fund
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(CONCLUDED)
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 $ 2,422,344 $ 50,791,684
Foreign currency transactions (151,740) (40,740)
-------------------------------
Total $ 2,270,604 $ 50,750,944
===============================
--------------------------------------------------------------------------
As of November 30, 1999, net unrealized appreciation for Federal income
tax purposes aggregated $50,791,684, of which $80,942,996 related to
appreciated securities and $30,151,312 related to depreciated securities.
At November 30, 1999, the aggregate cost of investments for Federal income
tax purposes was $488,335,536.
4 Commitments:
At November 30, 1999, the Portfolio had entered into foreign exchange
contracts under which it had agreed to purchase foreign currency with an
approximate value of $520,000.
November 30, 1999 30 Mercury Pan-European Growth Fund
<PAGE>
PORTFOLIO INFORMATION
WORLDWIDE INVESTMENTS AS OF NOVEMBER 30, 1999
================================================================================
Ten Largest Percent of
Equity Holdings Net Assets
================================================================================
Nokia Oyj 3.4%
- --------------------------------------------------------------------------------
Mannesmann AG 3.2
- --------------------------------------------------------------------------------
BP Amoco PLC 3.0
- --------------------------------------------------------------------------------
Bayer AG 2.6
- --------------------------------------------------------------------------------
Shell Transport & Trading Company 2.5
- --------------------------------------------------------------------------------
British Telecommunications PLC 2.5
- --------------------------------------------------------------------------------
Vodafone AirTouch PLC 2.5
- --------------------------------------------------------------------------------
Siemens AG 2.4
- --------------------------------------------------------------------------------
Total Fina SA 'B' 2.4
- --------------------------------------------------------------------------------
Telefonaktiebolaget LM Ericsson 'B' 2.1
- --------------------------------------------------------------------------------
Percent of
Ten Largest Industries Net Assets
================================================================================
Telecommunications 15.9%
- --------------------------------------------------------------------------------
Banking 14.1
- --------------------------------------------------------------------------------
Electrical & Electronics 9.6
- --------------------------------------------------------------------------------
Insurance 9.2
- --------------------------------------------------------------------------------
Health & Personal Care 8.5
- --------------------------------------------------------------------------------
Energy Sources 8.4
- --------------------------------------------------------------------------------
Business/Public Services 5.7
- --------------------------------------------------------------------------------
Broadcasting & Publishing 4.7
- --------------------------------------------------------------------------------
Merchandising 4.6
- --------------------------------------------------------------------------------
Chemicals 3.3
- --------------------------------------------------------------------------------
GEOGRAPHIC ALLOCATION
================================================================================
As a Percentage of Net Assets as of November 30, 1999*
A pie chart illustrating the following percentages (As a Percentage of Net
Assets as of November 30, 1999*)
Belgium 4.0%
Finland 3.4%
France 15.1%
Germany 15.2%
Italy 5.4%
Netherlands 7.4%
Spain 4.6%
Sweden 4.5%
Switzerland 9.9%
United Kingdom 28.8%
Other 2.4%**
* Total may not equal 100%.
** Includes Denmark, Greece, Ireland and Portugal.
November 30, 1999 31 Mercury Pan-European Growth Fund
<PAGE>
OFFICERS AND DIRECTORS
Jeffrey M. Peek, Director and President
David O. Beim, Director
James T. Flynn, Director
W. Carl Kester, Director
Karen P. Robards, Director
Terry K. Glenn, Director and
Executive Vice President
Peter John Gibbs, Senior Vice President
Donald C. Burke, Vice President and
Treasurer
Robert E. Putney, III, Secretary
Custodian
Brown Brothers Harriman & Co.
40 Water Street
Boston, MA 02109
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(888) 763-2260
This report is not authorized for use as an offer of sale or a solicitation of
an offer to buy shares of the Fund unless accompanied or preceded by the Fund's
current prospectus. Past performance results shown in this report should not be
considered a representation of future performance. Investment return and
principal value of shares will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Statements and other information
herein are as dated and are subject to change.
The Fund seeks long-term capital growth through investments primarily in a
diversified portfolio of equity securities of companies located in Europe. The
Fund will seek to achieve its objective by investing all of its assets in
Mercury Master Pan-European Growth Portfolio of Mercury Asset Management Master
Trust, which has the same investment objective as the Fund. The Fund's
investment experience will correspond to the investment experience of the
Portfolio.
Mercury Pan-European Growth Fund of
Mercury Asset Management Funds, Inc.
Box 9011
Princeton, NJ
08543-9011
[RECYCLE LOGO] Printed on post-consumer recycled paper MERCPAN--11/99
