CMA
CMA NORTH CAROLINA
MUNICIPAL MONEY FUND
Annual Report
March 31, 1995
MERRILL LYNCH BULL LOGO
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
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 1713
Boston, MA 02101
<PAGE>
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 221-7210*
[FN]
*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.
CMA North Carolina
Municipal Money Fund
Box 9011
Princeton, NJ 08543-9011
TO OUR SHAREHOLDERS:
For the year ended March 31, 1995, CMA North Carolina Municipal
Money Fund paid shareholders a net annualized yield of 2.61%*. As of
March 31, 1995, the Fund's 7-day yield was 3.39%.
The Environment
During the six months ended March 31, 1995, the perception that the
US economy was overheating and inflationary pressures were
increasing gave way to a more benign economic outlook. With more
signs of slowing growth, investors now appear to be forecasting a
"soft landing" for the US economy. Although gross domestic product
(GDP) was reported to have increased at a revised 5.1% rate during
the final quarter of 1994, declines in other indicators such as new
home sales and durable goods orders registered thus far in 1995 have
led investors to anticipate that the economy is losing enough
momentum to keep inflation under control and preclude further
significant monetary policy tightening by the Federal Reserve Board.
<PAGE>
However, as US stock and bond markets have risen on more positive
economic news, the value of the US dollar reached new lows relative
to the yen and the Deutschemark. Persistent trade deficits and
exports of capital from the United States have kept the US currency
in a decade-long decline relative to the Japanese and German
currencies. Over the longer term, since the United States has the
highest productivity among industrialized nations and among the
lowest labor costs, demand for US dollar-denominated assets may
improve. However, a reduction of the still-widening US trade deficit
may be necessary before the US dollar appreciates substantially
relative to the yen and the Deutschemark.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
The first months of 1995 have been very positive for the stock and
bond markets. Continued signs of a moderating expansion and
well-contained inflationary pressures would provide further
assurance that the peak in interest rates is behind us. On the other
hand, indications of reaccelerating growth and further significant
monetary policy tightening by the Federal Reserve Board would be a
decided negative for the US financial markets.
Investment Outlook and Strategy
Interest rates on short-term securities finished the six-month
period ended March 31, 1995 higher than at the beginning of the
period. However, interest rates were volatile during the March
period. The restrictive monetary policy initiated by the Federal
Reserve Board in February 1994 was maintained during the six-month
period ended March 31, 1995. On November 15, 1994 the Federal
Reserve Board made its most aggressive move of the cycle by hiking
both the Federal Funds rate and the discount rate 75 basis points
(0.75%) to 5.50% and 4.75%, respectively. The Federal Reserve Board
followed this move with a 50 basis point increase on February 1,
1995, making it the seventh interest rate hike of the cycle and
doubling the Federal Funds rate to its current level of 6.00%. The
first half of the six-month period ended March 31, 1995 was one of
rising short-term interest rates as investors drove interest rates
up in anticipation of additional Federal Reserve Board tightening.
However, the larger-than-expected increase in the Federal Funds rate
in November 1994 led investors to believe that the Federal Reserve
Board would achieve the elusive soft landing of the US economy. This
set the stage for a rally in US financial markets which drove
interest rates sharply lower. For example, interest rates on six-
month US Treasury bills rose by nearly 110 basis points by the
beginning of December 1994 from their October 1, 1994 levels, only
to fall by approximately 50 basis points by March 31, 1995 for a net
increase of approximately 60 basis points.
<PAGE>
North Carolina's conservative fiscal policies combined with an
over-funded pension liability are key factors for the State
maintaining its AAA rating. The State still possesses the largest
manufacturing base in the Southeast region despite its increased
diversification into such industries as financial services and high
technology in the past decade. Additionally, given the State's low
labor costs and overall lower business costs as well as its
commitment to higher education, North Carolina's outlook remains
attractive for continued corporate investment. As a result, North
Carolina's labor market continues to outperform the national market
with the February unemployment rate reported at 4.6% versus 5.4% for
the entire United States.
In fiscal year 1994, revenues exceeded estimates by $384 million and
expenditures fell $314 million below budget projections.
Consequently, the North Carolina legislative panel recommended
rolling back the corporate income tax from 7.75% to 7.00% and
cutting it even further for small businesses. In addition, the panel
proposed reducing individual income taxes by $200 million and also
eliminating the State intangibles tax on stocks and bonds.
CMA North Carolina Municipal Money Fund maintained a defensive
average portfolio maturity during the six-month period ended March
31, 1995 because of the continued volatility in the US Treasury
market. Additionally, the lack of short-term issuance continued to
restrict the Fund from any significant maturity extension. During
the March period, North Carolina's short-term issuance totaled a
meager $43.1 million, a decrease from the $104.1 million for the
previous six-month period. Currently, the Fund utilizes tax-exempt
commercial paper to extend the yield curve when appropriate. CMA
North Carolina Municipal Money Fund began the period with the
average portfolio maturity in the 45-day range and concluded it with
a maturity in the 25-day range. Diversification and credit quality
remain important to the Fund, and we will continue to closely
monitor the everchanging marketplace.
In Conclusion
We thank you for your continued support of CMA North Carolina
Municipal Money Fund, and we look forward to serving your investment
needs in the future.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President and Portfolio Manager
May 2, 1995
<PAGE>
Portfolio Abbreviations for CMA North Carolina Municipal Money Fund
ACES SM Adjustable Convertible Extendable Securities
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
COP Certificates of Participation
CP Commercial Paper
DATES Daily Adjustable Tax-Exempt Securities
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1995 (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
North $ 1,000 Beaufort County, North Carolina, Industrial Facilities and Pollution
Carolina--91.0% Control Financing Authority Revenue Bonds (Texasgulf, Inc. Project),
VRDN, 4.375% due 12/01/2000 (a) $ 1,000
3,000 Carteret County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, IDR (Texasgulf, Inc. Project), VRDN,
4.375% due 10/01/2005 (a) 3,000
12,300 Charlotte, North Carolina, Airport Revenue Refunding Bonds, VRDN,
Series A, 4.15% due 7/01/2016 (a) 12,300
1,071 Columbus County, North Carolina, Water and Sewer District No. 1, BAN,
4.50% due 7/12/1995 1,072
Craven County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (Cravenwood Energy Project), VRDN,
AMT (a):
2,840 Series A, 4.30% due 5/01/2011 2,840
5,600 Series B, 4.30% due 5/01/2011 5,600
5,000 Series C, 4.30% due 5/01/2011 5,000
Cumberland County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, Revenue Refunding Bonds (Monsanto Co. Project),
VRDN (a):
1,715 3.90% due 6/01/2012 1,715
600 3.90% due 10/01/2014 600
Durham County, North Carolina, Public Improvement Bonds, VRDN, UT (a):
1,000 4.05% due 5/01/2009 1,000
2,800 4.05% due 2/01/2010 2,800
1,000 4.05% due 5/01/2010 1,000
1,000 4.05% due 5/01/2011 1,000
<PAGE> 1,800 Durham, North Carolina, Water and Sewer Utility System Revenue Bonds,
VRDN, 3.95% due 12/01/2015 (a) 1,800
2,800 Gaston County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Mount Holly Enterprises/
Queens G.P. Inc.), VRDN, AMT, 4.45% due 5/01/2004 (a) 2,800
Granville County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds, VRDN, AMT (a):
4,000 (Mayville Metal Production Project), 4.10% due 5/23/2020 4,000
2,375 (Tuscarora Plastics, Inc. Project), 4.45% due 12/01/2001 2,375
500 Greene County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, IDA, Revenue Bonds (Federal Paper Board
Company, Inc. Project), VRDN, AMT, 4.35% due 11/01/2009 (a) 500
Greensboro, North Carolina, Public Improvement Bonds, VRDN, Series B (a):
1,400 4.25% due 4/01/2007 1,400
1,450 4.25% due 4/01/2008 1,450
1,650 4.25% due 4/01/2010 1,650
1,950 4.25% due 4/01/2013 1,950
2,000 4.25% due 4/01/2014 2,000
</TABLE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1995(CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
North Carolina $16,800 Halifax County, North Carolina, Industrial Facilities and Pollution
(continued) Control Financing Authority Revenue Bonds (Exempt Facilities-Westmoreland),
VRDN, 4.35% due 12/01/2019 (a) $ 16,800
2,700 Haywood County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, Solid Waste Disposal Revenue Refunding
Bonds (Champion International Corporation Project), VRDN, 4.05% due
3/01/2020 (a) 2,700
3,727 Hoke County, North Carolina, BAN, 4.75% due 9/27/1995 3,735
8,300 Iredell County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Rubbermaid Specialty Products,
Inc.), 3.85% due 6/01/1995 (a) 8,300
3,700 Lenoir County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (West Co. Nebraska, Inc. Project), VRDN,
4.15% due 10/01/2005 (a) 3,700
9,500 Lincoln County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (Hof Textiles Inc. Project), VRDN, AMT,
4.15% due 10/01/2011 (a) 9,500
Mecklenberg County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds, VRDN (a):
2,000 (Edgecomb Metals Company Project), 4.25% due 12/01/2009 2,000
1,000 (Flawa Corporation Project), AMT, 4% due 12/01/2008 1,000
<PAGE> 1,130 Mecklenburg County, North Carolina, Refunding Bonds, UT, 7% due
7/01/1995 (b) 1,144
2,000 New Hanover County, North Carolina, BAN, 3.80% due 6/21/1995 2,000
1,055 New Hanover County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Interroll Corp. Project), VRDN,
4.45% due 11/01/2003 (a) 1,055
North Carolina Eastern Municipal Power Agency, Power System Revenue
Bonds, Series B, CP:
12,085 4.10% due 4/03/1995 12,085
7,300 4.25% due 4/03/1995 7,300
5,400 4.10% due 5/15/1995 5,400
7,000 4.30% due 5/17/1995 7,000
5,400 4.15% due 5/18/1995 5,400
1,600 3.80% due 5/22/1995 1,600
North Carolina Educational Facilities Finance Agency Revenue Bonds,
VRDN (a):
950 (Bowman Grey School of Medicine Project), 4.10% due 9/01/2020 950
3,900 (Duke University Project), Series A, 4.075% due 12/01/2017 3,900
1,500 (Duke University Project), Series A, 4.075% due 6/01/2027 1,500
4,300 (Duke University Project), Series B, 4.075% due 12/01/2021 4,300
2,700 (Wake Forest University Project), 3.95% due 1/01/2009 2,700
North Carolina Medical Care Commission, Hospital Revenue Bonds,
VRDN (a):
6,900 (Carol Woods Project), 4.30% due 4/01/2021 6,900
3,300 (Duke University Hospital), Series B, 4.075% due 6/01/2015 3,300
2,130 (Duke University Hospital), Series D, 4.075% due 6/01/2015 2,130
3,500 (North Carolina Baptist Hospital Project), Series B, 4.10% due
6/01/2022 3,500
13,200 (Park Ridge Hospital Project), 4.25% due 8/15/2018 13,200
7,100 (Pooled Equipment Financing Project), ACES, 4.20% due 12/01/2025 7,100
5,650 Refunding (Duke University Hospital Project), Series A, 4.075%
due 6/01/2023 5,650
3,300 Refunding (Moses H. Cone Memorial Hospital Project), 4.10% due
10/01/2023 3,300
1,100 Person County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, Solid Waste Disposal Revenue Bonds
(Carolina Power and Light Company), DATES, 4.40% due 11/01/2016 (a) 1,100
</TABLE>
<PAGE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1995(CONCLUDED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
North Carolina $ 1,000 Piedmont Triad Airport Authority, North Carolina, Special Facility
(concluded) Revenue Bonds (Purpose-Cessna Aircraft Company Project), VRDN, AMT,
4.45% due 10/01/2012 (a) $ 1,000
700 Rowan County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Reynolds Metals Company
Project), 4.40% due 6/01/1995 (a) 700
7,000 Union County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, IDR, Refunding (Square D Co. Project),
VRDN, 4.125% due 3/01/2003 (a) 7,000
6,100 University of North Carolina, Chapel Hill Foundation, Inc., COP, CP,
4% due 4/07/1995 6,100
4,050 University of North Carolina, Chapel Hill Revenue Bonds (Kenan Memorial
Stadium), VRDN, 3.85% due 11/01/2007 (a) 4,050
University of North Carolina, Chapel Hill, School of Medicine and
Ambulatory Care Clinic Revenue Bonds:
3,900 CP, 4% due 4/07/1995 3,900
2,800 VRDN, 4.15% due 10/01/2002 (a) 2,800
Wake County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Carolina Power and Light
Company Project) (a):
1,600 DATES, 4.45% due 3/01/2017 1,600
4,500 VRDN, Series C, 4.20% due 10/01/2015 4,500
2,000 Wayne County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, Revenue Refunding Bonds (General Signal),
VRDN, 4.125% due 12/01/2000 (a) 2,000
1,400 Wilson County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, IDR (North Carolina Chip Co. Project), VRDN,
4.45% due 1/01/2000 (a) 1,400
1,350 Winston-Salem, North Carolina, Urban Redevelopment Mortgage Revenue
Refunding Bonds (Summit Square Garden Apartments), CP, 4.10% due
4/03/1995 1,350
Winston-Salem, North Carolina, Water and Sewer System Revenue Bonds:
6,000 CP, 3.75% due 5/17/1995 6,000
2,100 VRDN, 4.10% due 6/01/2014 (a) 2,100
Puerto Rico-- Puerto Rico Commonwealth, Government Development Bank, Revenue Bonds:
9.0% 5,000 CP, 3.75% due 5/10/1995 5,000
600 Refunding, VRDN, 4.10% due 12/01/2015 (a) 600
5,000 Puerto Rico Commonwealth, Highway and Transportation Authority, Highway
Revenue Bonds, VRDN, Series X, 3.60% due 7/01/l999 (a) 5,000
Puerto Rico Industrial, Medical and Environmental Pollution Control
Facilities, Financing Authority Revenue Bonds:
2,000 (Ana G. Mendez Foundation), CP, 3.50% due 4/12/1995 2,000
12,500 (Reynolds Metals Co. Project), 4% due 9/01/1995 12,502
<PAGE>
Total Investments (Cost--$278,703*)-- 100.0% 278,703
Other Assets Less Liabilities--0.0% 1
--------
Net Assets--100.0% $278,704
========
<FN>
(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, 1995.
(b)Prerefunded.
*Cost for Federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 31, 1995
<S> <C> <C>
Assets:
Investments, at value (identified cost--$278,703,454) (Note 1a) $ 278,703,454
Cash 131,110
Interest receivable 1,171,294
Deferred organization expenses (Note 1d) 9,362
Prepaid registration fees and other assets (Note 1d) 14,212
-------------
Total assets 280,029,432
-------------
Liabilities:
Payables:
Securities purchased $ 1,072,050
Investment adviser (Note 2) 99,110
Distributor (Note 2) 93,745 1,264,905
-------------
Accrued expenses and other liabilities 60,549
-------------
Total liabilities 1,325,454
-------------
Net Assets $ 278,703,978
=============
Net Assets Consist of:
Shares of beneficial interest, $.10 par value, unlimited number of shares authorized $ 27,873,249
Paid-in capital in excess of par 250,859,243
Accumulated realized capital losses--net (Note 4) (28,514)
-------------
Net Assets--Equivalent to $1.00 per share based on 278,732,492 shares of
beneficial interest outstanding $ 278,703,978
=============
</TABLE>
<PAGE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1995
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 9,431,728
Expenses:
Investment advisory fees (Note 2) $ 1,474,176
Distribution fees (Note 2) 366,625
Transfer agent fees (Note 2) 68,413
Accounting services (Note 2) 57,506
Professional fees 49,342
Registration fees (Note 1d) 36,158
Custodian fees 28,231
Printing and shareholder reports 27,124
Pricing fees 8,322
Amortization of organization expenses (Note 1d) 8,097
Trustees' fees and expenses 3,769
Other 6,319
-------------
Total expenses before reimbursement 2,134,082
Reimbursement of expenses (Note 2) (294,835)
-------------
Total expenses after reimbursement 1,839,247
-------------
Investment income--net 7,592,481
Realized Loss on Investments--Net (Note 1c) (13,460)
-------------
Net Increase in Net Assets Resulting from Operations $ 7,579,021
=============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended March 31,
Increase (Decrease) in Net Assets: 1995 1994
<S> <C> <C>
Operations:
Investment income--net $ 7,592,481 $ 4,383,724
Realized loss on investments--net (13,460) (14,754)
------------- -------------
Net increase in net assets resulting from operations 7,579,021 4,368,970
------------- -------------
Dividends to Shareholders (Note 1e):
Investment income--net (7,592,405) (4,380,466)
------------- -------------
Net decrease in net assets resulting from dividends to shareholders (7,592,405) (4,380,466)
------------- -------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 924,263,338 819,514,191
Net asset value of shares issued to shareholders in reinvestment of dividends
(Note 1e) 7,592,507 4,380,479
------------- -------------
931,855,845 823,894,670
Cost of shares redeemed (946,590,315) (765,815,611)
------------- -------------
Net increase (decrease) in net assets derived from beneficial interest transactions (14,734,470) 58,079,059
------------- -------------
Net Assets:
Total increase (decrease) in net assets (14,747,854) 58,067,563
Beginning of year 293,451,832 235,384,269
------------- -------------
End of year* $ 278,703,978 $ 293,451,832
============= =============
<FN>
*Undistributed investment income--net (Note 1f) $ -- $ 298
============= =============
See Notes to Financial Sta tements.
</TABLE>
<PAGE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
For the
Period
The following per share data and ratios have been derived May 28,
from information provided in the financial statements. 1991++ to
For the Year Ended March 31, March 31,
Increase (Decrease) in Net Asset Value: 1995 1994 1993 1992
<S> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- --------
Investment income--net .03 .02 .02 .03
-------- -------- -------- --------
Total from investment operations .03 .02 .02 .03
-------- -------- -------- --------
Less dividends from investment income--net (.03) (.02) (.02) (.03)
-------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ========
Total Investment Return 2.61% 1.85% 2.25% 3.49%*
======== ======== ======== ========
Ratios to Average Net Assets:
Expenses, net of reimbursement and excluding
distribution fees .50% .48% .45% .33%*
======== ======== ======== ========
Expenses, net of reimbursement .62% .61% .57% .45%*
======== ======== ======== ========
Expenses .72% .71% .73% .83%*
======== ======== ======== ========
Investment income--net 2.58% 1.84% 2.20% 3.25%*
======== ======== ======== ========
Supplemental Data:
Net assets, end of period (in thousands) $278,704 $293,452 $235,384 $221,060
======== ======== ======== ========
<FN>
*Annualized.
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
CMA North Carolina 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 to shareholders--The Fund declares dividends daily and
reinvests daily such dividends (net of non-resident alien 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.
<PAGE>
(f) Reclassification--Generally accepted accounting principles
require that certain differences between undistributed net
investment income for financial reporting and tax purposes, if
permanent, be reclassified to accumulated net realized capital
losses. Accordingly, current year's permanent book/tax differences
of $374 have been reclassified from undistributed net investment
income to accumulated net realized capital losses. 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" or "Adviser"). The general partner of
FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co. ("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 $ l
billion. For the year ended March 31, 1995, FAM earned fees of
$1,474,176, of which $294,835 was voluntarily waived.
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
The most restrictive annual expense limitation requires that the
Adviser reimburse the Fund to the extent the Fund's expenses
(excluding interest, taxes, distribution fees, brokerage fees and
commissions, and extraordinary items) exceed in any fiscal year 2.5%
of the Fund's first $30 million of average daily net assets, 2.0% of
the Fund's next $70 million of average daily net assets, and 1.5% of
the average daily net assets in excess thereof. No fee payment will
be made to the Adviser during any year which will cause such
expenses to exceed the pro rata expense limitation at the time of
such payment.
<PAGE>
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.
Financial Data Services, Inc. ("FDS"), 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, MLPF&S, FDS, 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, 1995, the Fund had a net capital loss carryforward of
approximately $28,000, of which $5,000 expires in 2001, $10,000
expires in 2002 and $13,000 expires in 2003. This amount will be
available to offset like amounts of any future taxable gains.
<PAGE>
<AUDIT-REPORT>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
CMA North Carolina 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 North
Carolina Municipal Money Fund of CMA Multi-State Municipal Series
Trust as of March 31, 1995, 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
the three-year period then ended and the period May 28, 1991
(commencement of operations) to March 31, 1992. 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, 1995 by correspondence with the custodian and broker. 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 North Carolina Municipal Money Fund of CMA Multi-State Municipal
Series Trust as of March 31, 1995, 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 2, 1995
</AUDIT-REPORT>
<PAGE>
IMPORTANT TAX INFORMATION (UNAUDITED)
All of the net investment income distributions paid daily by CMA
North Carolina Municipal Money Fund of CMA Multi-State Municipal
Series Trust during the taxable year ended March 31, 1995 qualify as
tax-exempt interest dividends for Federal income tax purposes.
Additionally, there were no capital gains distributed during the
Fund's taxable year ended March 31, 1995.
Please retain this information for your records.
