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CMA CONNECTICUT
MUNICIPAL MONEY FUND
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Annual Report
March 31, 1997
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Officers and Trustees
Arthur Zeikel -- President and Trustee
Ronald W. Forbes -- Trustee
Cynthia A. Montgomery -- Trustee
Charles C. Reilly -- Trustee
Kevin A. Ryan -- Trustee
Richard R. West -- Trustee
Terry K. Glenn -- Executive Vice President
Vincent R. Giordano -- Senior Vice President
Edward J. Andrews -- Vice President
Donald C. Burke -- Vice President
Peter J. Hayes -- Vice President
Kenneth A. Jacob -- Vice President
Steven T. Lewis -- Vice President
Darrin J. SanFillippo -- Vice President
Kevin A. Schiatta -- Vice President
Helen Marie Sheehan -- Vice President
Gerald M. Richard -- Treasurer
Robert Harris -- Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 221-7210*
* For inquiries regarding your CMA account,
call (800) CMA-INFO [(800) 262-4636].
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, which will fluctuate. The Fund seeks to maintain a
consistent $1.00 net asset value per share, although this cannot be
assured. An investment in the Fund is neither insured nor guaranteed
by the US Government. Statements and other information herein are as
dated and are subject to change.
CMA Connecticut
Municipal Money Fund
Box 9011
Princeton, NJ 08543-9011 #16055 -- 3/97
[RECYCLE LOGO] Printed on post-consumer recycled paper
TO OUR SHAREHOLDERS:
For the year ended March 31, 1997, CMA Connecticut Municipal Money Fund
paid shareholders a net annualized yield of 2.79%*. As of March 31, 1997,
the Fund's 7-day yield was 2.74%.
The Environment
Stock and bond market turbulence increased during the six-month period
ended March 31, 1997. Mounting evidence of stronger-than-expected
economic growth suggested to investors that the Federal Reserve Board
would make a preemptive strike to contain inflationary pressures. These
concerns were heightened by statements made by Federal Reserve Board
Chairman Alan Greenspan, and culminated in an announced increase in the
Federal Funds rate of 0.25% to 5.5% on March 25. As investors became
concerned that this might prove to be only the first in a series of
monetary policy tightening moves, interest rates rose and stock and bond
prices declined. Following the central bank's action, investor sentiment
fluctuated from negative to more positive, depending upon whether the
latest economic data releases were perceived to suggest an overheating
or moderating trend. It appears that clear-cut signs of continued low
inflation and moderate economic growth, as well as no further
indications of monetary policy tightening, are needed before stability
returns to the financial markets.
Investment Outlook and Strategy
In the six-month period ended March 31, 1997, short-term municipal
market investors proceeded cautiously in light of continued strong
economic data and possible changes by the Federal Reserve Board. The
Federal Reserve Board's decision to raise the Federal Funds rate by 25
basis points (0.25%) at its March 25, 1997 meeting pushed short-term
municipal note yields considerably higher by period-end. Several
technical factors also influenced the direction of yields during the
past six months. Year-end inventory concerns for broker/dealers moved
interest rates on variable rate demand notes higher through December
1996. During the second half of the six-month period ended March 31,
1997, yields moved lower as money flowed into the short-term end of
the market caused by maturities, interest payments and income tax
refunds.
* Based on a constant investment throughout the period, with dividends
compounded daily, and reflecting a net return to the investor after all
expenses.
The State of Connecticut continues to maintain its solid long-term debt
credit ratings from the major rating agencies affording it strong market
access. Governor John Rowland proposed a two-year $20.5 billion budget
which is expected to reduce the state's workforce, while cutting income
taxes. The state expects to end fiscal year 1997 with fund surpluses of
approximately $120 million. Also, short-term municipal issuance within
Connecticut decreased to $113.7 million from $183.3 million in the
previous period.
CMA Connecticut Municipal Money Fund's portfolio strategy during the six
months ended March 31, 1997 was shaped by several factors. These factors
contributed to the Fund closing the six-month period with an average
portfolio maturity in the 55-day range. The uncertainty surrounding
interest rates and their future direction made it prudent to allow the
Fund's average portfolio maturity to contract to a neutral range. The
Fund's portfolio composition experienced several noteworthy adjustments.
We increased our holdings in municipal notes by 10% since September 30,
1996. The notes purchased provided the Fund with diversification,
liquidity and attractive yields. We also decreased our holdings in tax-
exempt commercial paper and variable rate demand notes by approximately
5% each. We continued to use our commercial paper holdings to manage the
Fund's average portfolio maturity. As our positions matured, we
repurchased securities with maturities ranging from 30 days -- 60 days.
This maturity range allowed us to maintain our average life within the
desired limits while positioning the Fund to potentially benefit from
the higher yields historically associated with the April tax payment
period. Our portfolio approach for the 12-month period ended March 31,
1997 allowed us to provide the Fund with an attractive yield which
proved to be better than the average for Connecticut tax-exempt money
funds for the same period.
In Conclusion
We appreciate your continued interest in CMA Connecticut Money Fund, and
we look forward to serving your investment needs in the future.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/VINCENT R. GIORDANO
Vincent R. Giordano
Senior Vice President
/S/STEVEN T. LEWIS
Steven T. Lewis
Vice President and Portfolio Manager
April 28, 1997
<TABLE>
<CAPTION>
CMA Connecticut Municipal Money Fund
Schedule of Investments as of March 31, 1997 (in Thousands)
Face Value
State Amount Issue (Note 1a)
<S> <C> <C> <C>
Connecticut -- $6,675 Berlin, Connecticut, BAN, UT, 3.75% due 6/16/1997 $6,676
78.5% 2,000 Brookfield, Connecticut, BAN, 3.73% due 6/12/1997 2,000
16,400 Connecticut State Development Authority, Health Care Revenue Bonds
(Corporate Independent Living Project), VRDN, 3.20% due 7/01/2015 (a) 16,400
5,420 Connecticut State Development Authority, IDA (Sealectro Corporation
Project), 3.90% due 12/01/1997 5,420
Connecticut State Development Authority, PCR, Refunding, VRDN (a):
16,400 (Connecticut Light & Power Co. Project), Series A, 3.50% due 9/01/2028 16,400
1,000 (United Illuminating Co. Project), 3.50% due 6/01/2026 1,000
16,400 (Western Massachusetts Electric Co.), Series A, 3.15% due 9/01/2028 16,400
1,000 Connecticut State Development Authority Revenue Bonds (Solid Waste Project),
VRDN, AMT, 3.25% due 8/01/2023 (a) 1,000
6,750 Connecticut State, GO, Series D, 3.75% due 12/01/1997 6,760
5,000 Connecticut State, HFA (Housing Mortgage), AMT, Series A, Sub-Series A-4,
3.65% due 4/10/1997 5,000
Connecticut State, HFA (Housing Mortgage Finance Program), AMT, CP, Series D:
8,950 3.55% due 4/01/1997 8,950
4,505 3.40% due 4/09/1997 4,505
4,500 3.45% due 5/09/1997 4,500
Connecticut State Health and Educational Facilities Authority Revenue Bonds:
3,200 (Yale -- New Haven Hospital), Series E, 3.60% due 6/01/1997 (b) 3,200
5,075 (Yale University), CP, Series L, 3.35% due 4/01/1997 5,075
4,300 (Yale University), CP, Series M, 3.05% due 4/03/1997 4,300
4,000 (Yale University), CP, Series N, 3.05% due 4/03/1997 4,000
2,550 (Yale University), CP, Series O, 3.05% due 4/03/1997 2,550
1,000 (Yale University), CP, Series P, 3.35% due 4/01/1997 1,000
Connecticut State Municipal Electric Energy Cooperative, Power Supply
System Revenue Bonds, CP, Series A:
1,500 3.35% due 4/04/1997 1,500
1,500 3.35% due 4/08/1997 1,500
1,500 3.30% due 4/14/1997 1,500
1,500 3.10% due 5/01/1997 1,500
1,000 Connecticut State Refunding (Economic Recovery Notes), UT, 5% due
12/15/97 1,010
Connecticut State Special Assessment Unemployment Compensation, Advanced
Fund Revenue Bonds (c):
6,500 Series A, 4.10% due 5/15/1997 6,503
5,000 Series A, 4.10% due 11/15/1997 5,014
19,900 Connecticut State Special Assessment Unemployment Compensation, Advanced
Fund Revenue Bonds (Connecticut Unemployment), Series C, 3.90% due
7/01/1997 (b) 19,900
45,545 Connecticut State Special Tax Obligation Revenue Bonds (Transportation
Infrastructure), VRDN, Second Lien, Series 1, 3.40% due 12/01/2010 (a) 45,545
9,900 Eagle Tax-Exempt Trust, VRDN, 3.10% due 10/01/2011 (a) 9,900
8,000 Eagle Tax-Exempt Trust, VRDN, 3.56% due 8/15/2012 (a) 8,000
5,000 East Haven, Connecticut, UT, 4% due 9/03/1997 5,003
4,000 Manchester, Connecticut, Temporary Notes, Lot B, 3.60% due 5/28/1997 4,000
1,085 Meriden, Connecticut, UT, 4.25% due 8/01/1997 (b) 1,086
9,000 New Canaan, Connecticut, BAN, UT, 3.75% due 3/10/1998 9,026
1,440 New Fairfield, Connecticut, BAN, UT, 3.75% due 5/15/1997 1,440
13,000 New Haven, Connecticut, UT, 3.94% due 5/22/1997 13,005
810 New Milford, Connecticut, BAN, UT, 4% due 5/13/1997 811
6,875 North Haven, Connecticut, BAN, 4% due 9/04/1997 6,884
8,400 Stamford, Connecticut, Housing Authority Revenue Bonds (Morgan Street
Project), VRDN, AMT, 3.45% due 8/01/2024 (a) 8,400
Puerto Rico -- Puerto Rico Commonwealth, Government Development Bank Revenue Bonds:
20.8% 1,000 CP, 3.10% due 4/04/1997 1,000
1,000 CP, 3.10% due 4/07/1997 1,000
1,000 CP, 3.15% due 4/08/1997 1,000
4,600 CP, 3.30% due 4/09/1997 4,600
3,800 CP, 3.20% due 5/01/1997 3,800
4,000 CP, 3.40% due 5/01/1997 4,000
5,200 Refunding, VRDN, 3.10% due 12/01/2015 (a) 5,200
7,300 Puerto Rico Commonwealth, Highway and Transportation Authority, Highway
Revenue Bonds, VRDN, Series X, 3.10% due 7/01/1999 (a) 7,300
24,700 Puerto Rico Commonwealth, TRAN, Series 1997-A, 4% due 7/30/1997 24,745
2,000 Puerto Rico Electric Power Authority, Power Revenue Refunding Bonds
(Puerto Rico Commonwealth Water Resources Authority), Series L, 8.40%
due 7/01/1997 (d) 2,064
Puerto Rico Industrial, Medical and Environmental Pollution Control Facilities
Financing Authority Revenue Bonds:
7,100 CP, 3.35% due 4/17/1997 7,100
2,750 Series A, 3.75% due 12/01/1997 2,753
Puerto Rico Industrial, Tourist, Educational, Medical and Environmental Control
Facilities Financing Authority, Higher Education Revenue Bonds, CP, Series A:
3,100 3.50% due 4/09/1997 3,100
3,100 3.55% due 5/09/1997 3,100
Total Investments (Cost -- $337,425) -- 99.3% 337,425
Other Assets Less Liabilities -- 0.7% 2,506
---------
Net Assets -- 100.0% $339,931
=========
(a) The interest rate is subject to change periodically based on certain indexes. The
interest rate shown is the rate in effect at March, 31 1997.
(b) FGIC Insured.
(c) AMBAC Insured.
(d) Prerefunded.
Portfolio Abbreviations for CMA Connecticut Municipal Money Fund
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
CP Commercial Paper
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
PCR Pollution Control Revenue Bonds
TRAN Tax Revenue Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
CMA Connecticut Municipal Money Fund
Statement of Assets and Liabilities as of March 31, 1997
<S> <C> <C>
Assets:
Investments, at value (identified cost -- $337,424,808*) (Note 1a) $337,424,808
Cash 6,891
Interest receivable 2,812,776
Prepaid registration fees and other assets (Note 1d) 15,418
------------
Total assets 340,259,893
------------
Liabilities:
Payables:
Investment adviser (Note 2) $143,017
Distributor (Note 2) 97,723
Dividends to shareholders (Note 1e) 282
Beneficial interest redeemed 31 241,053
------------
Accrued expenses and other liabilities 88,091
------------
Total liabilities 329,144
------------
Net Assets $339,930,749
============
Net Assets Consist of:
Shares of beneficial interest, $0.10 par value, unlimited number of shares
authorized $34,007,223
Paid-in capital in excess of par 306,065,009
Accumulated realized capital losses -- net (Note 4) (141,483)
------------
Net Assets -- Equivalent to $1.00 per share based on 340,072,232 shares of
beneficial interest outstanding $339,930,749
============
* Cost for Federal income tax purposes was $337,426,745. As of March 31, 1997, net
unrealized depreciation for Federal income tax purposes amounted to $1,937, all of
which related to depreciated securities.
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
CMA Connecticut Municipal Money Fund
Statement of Operations for the Year Ended March 31, 1997
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $10,776,804
Expenses:
Investment advisory fees (Note 2) $1,550,354
Distribution fees (Note 2) 383,286
Accounting services (Note 2) 60,088
Professional fees 50,439
Registration fees (Note 1d) 49,769
Transfer agent fees (Note 2) 46,705
Custodian fees 25,124
Printing and shareholder reports 20,231
Pricing fees 2,911
Trustees' fees and expenses 2,787
Amortization of organization expenses (Note 1d) 523
Other 3,988
------------
Total expenses 2,196,205
------------
Investment income -- net 8,580,599
Realized Loss on Investments -- Net (Note 1c) (7,261)
------------
Net Increase in Net Assets Resulting from Operations $8,573,338
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
CMA Connecticut Municipal Money Fund
Statements of Changes in Net Assets
For the Year Ended
March 31,
1997 1996
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Investment income -- net $8,580,599 $8,278,292
Realized loss on investments -- net (7,261) (320)
--------------- ---------------
Net increase in net assets resulting from operations 8,573,338 8,277,972
--------------- ---------------
Dividends to Shareholders (Note 1e):
Investment income -- net (8,579,669) (8,275,678)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (8,579,669) (8,275,678)
--------------- ---------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 1,090,795,423 1,135,984,616
Net asset value of shares issued to shareholders in reinvestment
of dividends (Note 1e) 8,579,691 8,277,928
--------------- ---------------
1,099,375,114 1,144,262,544
Cost of shares redeemed (1,072,800,492) (1,091,300,656)
--------------- ---------------
Net increase in net assets derived from beneficial interest transactions 26,574,622 52,961,888
--------------- ---------------
Net Assets:
Total increase in net assets 26,568,291 52,964,182
Beginning of year 313,362,458 260,398,276
--------------- ---------------
End of year* $339,930,749 $313,362,458
=============== ===============
*Undistributed investment income -- net (Note 1f) $-- $1,002
=============== ===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
CMA Connecticut Municipal Money Fund
Financial Highlights
The following per share data and ratios have been derived
from information provided in the financial statements. For the Year Ended March 31,
1997 1996 1995 1994 1993
Increase (Decrease) in Net Asset Value:
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- --------
Investment income -- net .03 .03 .03 .02 .02
-------- -------- -------- -------- --------
Total from investment operations .03 .03 .03 .02 .02
-------- -------- -------- -------- --------
Less dividends from investment income -- net (.03) (.03) (.03) (.02) (.02)
-------- -------- -------- -------- --------
Net asset value, end of year $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== ========
Total Investment Return 2.79% 3.02% 2.54% 1.77% 2.20%
======== ======== ======== ======== ========
Ratios to Average Net Assets:
Expenses, net of reimbursement .71% .72% .71% .70% .63%
======== ======== ======== ======== ========
Expenses .71% .72% .71% .70% .73%
======== ======== ======== ======== ========
Investment income -- net 2.76% 2.97% 2.53% 1.76% 2.17%
======== ======== ======== ======== ========
Supplemental Data:
Net assets, end of year (in thousands) $339,931 $313,362 $260,398 $250,038 $231,431
======== ======== ======== ======== ========
See Notes to Financial Statements.
</TABLE>
CMA Connecticut Municipal Money Fund
Notes to Financial Statements
1. Significant Accounting Policies:
CMA Connecticut Municipal Money Fund (the "Fund") is part of CMA Multi-
State Municipal Series Trust (the "Trust"). The Fund is registered under
the Investment Company Act of 1940 as a non-diversified, open-end
management investment company. The following is a summary of significant
accounting policies followed by the Fund.
(a) Valuation of investments -- Investments are valued at amortized
cost, which approximates market value. For the purpose of valuation, the
maturity of a variable rate demand instrument is deemed to be the next
coupon date on which the interest rate is to be adjusted. In the case of
a floating rate instrument, the remaining maturity is the demand notice
payment period.
(b) 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 its shareholders. Therefore, no Federal income tax provision
is required.
(c) Security transactions and investment income -- Security transactions
are recorded on the dates the transactions are entered into (the trade
dates). Interest income (including amortization of premium and discount)
is recognized on the accrual basis. Realized gains and losses on
security transactions are determined on the identified cost basis.
(d) Deferred organization expenses and prepaid registration fees -- Deferred
organization expenses are charged to expense on a straight-line basis over a
five-year period. Prepaid registration fees are charged to expense as the
related shares are issued.
(e) Dividends and distributions to shareholders -- The Fund declares
dividends daily and reinvests daily such dividends (net of non-resident
alien tax and back-up withholding tax withheld) in additional fund
shares at net asset value. Dividends are declared from the total of net
investment income, excluding discounts earned other than original issue
discounts. Net realized capital gains, if any, are normally distributed
annually after deducting prior years' loss carryforward. The Fund may
distribute capital gains more frequently than annually in order to
maintain the Fund's net asset value at $1.00 per share.
(f) Reclassification -- Generally accepted acounting principles require
that certain components of net assets be adjusted to reflect permanent
differences between financial and tax reporting. Accordingly, current
year's permanent book/tax differences of $1,932 have been reclassified
between accumulated net realized capital losses and undistributed net
investment income. These reclassifications have no effect on net assets
or net asset value per share.
2. Investment Advisory Agreement and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with 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.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily value
of the Fund's net assets, at the following annual rates: 0.50% of the
first $500 million of average daily net assets; 0.425% of average daily
net assets in excess of $500 million but not exceeding $1 billion; and
0.375% of average daily net assets in excess of $1 billion.
Pursuant to the Distribution and Shareholder Servicing Plan in
compliance with Rule 12b-1 under the Investment Company Act of 1940,
Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S") receives a
distribution fee from the Fund at the end of each month at the annual
rate of 0.125% of average daily net assets of the Fund. The distribution
fee is to compensate MLPF&S financial consultants and other directly
involved branch office personnel for selling shares of the Fund and for
providing direct personal services to shareholders. The distribution fee
is not compensation for the administrative and operational services
rendered to the Fund by MLPF&S in processing share orders and
administering shareholder accounts.
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), a 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 trustees of the Fund are officers and/or
directors of FAM, PSI, MLFDS, and/or ML & Co.
3. Shares of Beneficial Interest:
The number of shares purchased and redeemed during the period
corresponds to the amounts included in the Statements of Changes in Net
Assets for net proceeds from sale of shares and cost of shares redeemed,
respectively, since shares are recorded at $1.00 per share.
4. Capital Loss Carryforward:
At March 31, 1997, the Fund had a net capital loss carryforward of
approximately $138,000, of which $69,000 expires in 2000, $30,000
expires in 2001, $10,000 expires in 2002, $27,000 expires in 2003, and
$2,000 expires in 2005. This amount will be available to offset like
amounts of any future taxable gains.
CMA Connecticut Municipal Money Fund
Independent Auditors' Report
The Board of Trustees and Shareholders, CMA Connecticut Municipal Money
Fund of CMA Multi-State Municipal Series Trust:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of CMA Connecticut Municipal
Money Fund of CMA Multi-State Municipal Series Trust as of March 31,
1997, the related statements of operations for the year then ended and
changes in net assets for each of the years in the two-year period then
ended, and the financial highlights for each of the years in the five-
year period then ended. These financial statements and the financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements
and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
the financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included
confirmation of securities owned at March 31, 1997 by correspondence
with the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of CMA
Connecticut Municipal Money Fund of CMA Multi-State Municipal Series
Trust as of March 31, 1997, the results of its operations, the changes
in its net assets, and the financial highlights for the respective
stated periods in conformity with generally accepted accounting
principles.
Deloitte & Touche LLP
Princeton, New Jersey
May 1, 1997
Important Tax Information (unaudited)
All of the net investment income distributions paid daily by CMA
Connecticut Municipal Money Fund of CMA Multi-State Municipal Series
Trust during its taxable year ended March 31, 1997 qualify as tax-exempt
interest dividends for Federal income tax purposes.
Additionally, there were no capital gains distributed by the Fund during
the year.
Please retain this information for your records.
