CMA
CMA NORTH CAROLINA
MUNICIPAL MONEY FUND
Annual Report
March 31, 1996
Merrill Lynch
BULL LOGO
<PAGE>
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
Transfer Agent
Merrill Lynch 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. Statements and
other information herein are as dated and are subject to change.
CMA North Carolina
Municipal Money Fund
Box 9011
Princeton, NJ 08543-9011
To Our Shareholders:
For the year ended March 31, 1996, CMA North Carolina Municipal
Money Fund paid shareholders a net annualized yield of 3.13%*. As of
March 31, 1996, the Fund's 7-day yield was 2.69%.
<PAGE>
The Environment
As 1995 drew to a close and 1996 began, it appeared that the US
economy was losing momentum. Lackluster retail sales, increases in
initial unemployment claims (along with weak job and income growth),
and evidence of slowing in the manufacturing sector all suggested
that the rate of economic growth was slowing, with some forecasters
even suggesting the possibility of an imminent recession. With
inflationary pressures well subdued, these signs of economic
weakness led the Federal Reserve Board to follow a more
accommodative monetary policy.
However, investor perceptions regarding the rate of future economic
growth changed dramatically with the report of stronger-than-
expected employment data for February and March. As a result, the
consensus outlook regarding the direction of business activity
shifted from expectations of weakness to anticipation of a revival
in growth of the economy. Long-term interest rates rose, and the
Federal Reserve Board left monetary policy on hold.
Investors are likely to continue to focus on the probable direction
of economic activity and Federal Reserve Board monetary policy in
the weeks ahead. At this time, inflationary pressures do not seem to
be building and the manufacturing sector is still relatively weak,
which suggest that the economy is not on the verge of overheating.
Nevertheless, it is likely that any further indication of stronger
economic activity in the weeks ahead may add to investor concerns
that accelerating economic activity could lead to higher interest
rates.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
<PAGE>
Investment Outlook and Strategy
Amid a rash of textile mill firings and a slowing national economy,
the State of North Carolina's unemployment rate surged to 4.9% in
January. Although the State's unemployment rate for January was
among the lowest in the nation, it was North Carolina's worst month
in over a year and a marked increase from October's 3.9%. Because
the State's new income tax reduction program and elimination of the
intangibles tax are going to put money back into the pockets of many
residents, these programs will result in reduced tax revenues of
approximately $365 million annually. Therefore, the State will have
to find alternative sources of revenue, cut programs, limit spending
or implement a combination of these actions. Preliminary reports
indicate that the State will look to increase tuition at State
universities, streamline government programs and downsize State
government in order to make up some of the shortfall in tax
revenues. Conversely, both domestic and international businesses
continue to flock to the State, offsetting many of the job losses at
the textile and apparel plants. A recent example is the Swedish
conglomerate Perstorp Flooring which just bought 100 acres to build
its North American headquarters in Garner, North Carolina.
Therefore, State officials expect the State's unemployment rate,
which has hovered around 4.5% since 1994, to remain low through the
year 2000.
Although weak economic data continued to portray a slowing national
economy, the short-term tax-exempt yield curve remained relatively
flat for the first half of the six-month period ended March 31,
1996. Therefore, we maintained a relatively short average portfolio
maturity for a majority of this time. However, as weak holiday sales
confirmed the weakness of North Carolina's economy, the Fund's
average portfolio maturity was held in the 45-day range in mid-
December.
The Federal Reserve Board responded to the economic weakness by
lowering the Federal Funds rate by 25 basis points (0.25%) at both
the December and January Federal Open Market Committee meetings.
Extending the Fund's average portfolio maturity benefited
performance during the second half of the six-month period as yields
of State of North Carolina variable rate de-mand obligations fell,
causing a steepening short-term yield curve. Once again, North
Carolina's short-term issuance was meager, limiting the Fund from
any significant means of extension during a majority of this period.
During the period, North Carolina's fixed-rate, short-term issuance
totaled $20 million, a decrease from the $32 million issued during
the previous six-month period. The Fund, which began the period in
the 55-day maturity range, concluded the period in the 40-day range
in order to take advantage of the expected spike in interest rates
resulting from outflows during tax time. Diversification and credit
quality remain paramount, 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,
<PAGE>
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Darrin J. San Fillippo)
Darrin J. San Fillippo
Portfolio Manager
May 2, 1996
Portfolio Abbreviations for CMA North Carolina Municipal Money Fund
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
COP Certificates of Participation
CP Commercial Paper
DATES Daily Adjustable Tax-Exempt Securities
GO General Obligation Bonds
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
PCR Pollution Control Revenue Bonds
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (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--94.3% Control Financing Authority Revenue Bonds (Texasgulf, Inc. Project),
VRDN, 3.40% due 12/01/2000 (a) $ 1,000
1,095 Beaufort County, North Carolina, Refunding and Improvement Bonds, UT,
4% due 2/01/1997 (b) 1,102
2,068 Bladen County, North Carolina, BAN (Water District), UT, 3.59% due
4/24/1996 (c) 2,068
3,000 Carteret County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, PCR (Texasgulf, Inc. Project), VRDN,
3.425% due 10/01/2005 (a) 3,000
800 Catawba County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Lukens Steel Co. Project),
VRDN, AMT, 3.70% due 12/01/2009 (a) 800
895 Charlotte, North Carolina, COP (FY1996 Acquisition Project), Series A,
3.30% due 9/01/1996 895
950 Charlotte, North Carolina, Refunding Bonds, GO, UT, 4.20% due 2/01/1997 958
Craven County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Cravenwood Energy Project),
VRDN, AMT (a):
1,100 Series A, 3.60% due 5/01/2011 1,100
8,500 Series B, 3.60% due 5/01/2011 8,500
3,600 Series C, 3.60% due 5/01/2011 3,600
1,430 Craven County, North Carolina, School, BAN, UT, 3.63% due 6/05/1996 (c) 1,430
Cumberland County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, Revenue Refunding Bonds (Monsanto Co.
Project), VRDN (a):
1,715 3.20% due 6/01/2012 1,715
600 3.20% due 10/01/2014 600
Durham County, North Carolina, Public Improvement Bonds, VRDN, UT (a):
1,000 3.25% due 5/01/2009 1,000
1,000 3.25% due 5/01/2010 1,000
1,000 3.30% due 2/01/2011 1,000
1,000 3.25% due 5/01/2011 1,000
900 3.30% due 2/01/2013 900
1,800 Durham County, North Carolina, Water and Sewer Utility System Revenue
Bonds, VRDN, 3.40% due 12/01/2015 (a) 1,800
1,000 Forsyth County, North Carolina, GO, UT, 4.70% due 2/01/1997 1,012
2,800 Gaston County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Mount Holly Enterprises/
Queens G.P. Inc.), VRDN, AMT, 3.65% due 5/01/2004 (a) 2,800
950 Gaston County, North Carolina, Public Improvement, UT, 4.90% due
3/01/1997 (d) 963
Granville County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds, VRDN (a):
4,000 (Mayville Metal Production Project), 3.50% due 5/23/2020 4,000
2,155 (Tuscarora Plastics, Inc. Project), 3.65% due 12/01/2001 2,155
</TABLE>
<PAGE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
North Carolina $ 500 Greene County, North Carolina, Industrial Facilities and Pollution
(continued) Control Financing Authority, IDA, Revenue Bonds (Federal Paper Board
Company, Inc. Project), VRDN, AMT, 3.50% due 11/01/2009 (a) $ 500
Greensboro, North Carolina, Public Improvement Bonds, VRDN, Series B (a):
1,400 3.30% due 4/01/2007 1,400
1,450 3.30% due 4/01/2008 1,450
1,000 Guilford County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Pharmagraphics Inc.
Project), VRDN, AMT, 3.70% due 9/01/2010 (a) 1,000
24,015 Halifax County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Exempt Facilities-
Westmoreland Project), VRDN, AMT, 3.40% due 12/01/2019 (a) 24,015
2,500 Hillsborough, North Carolina, GO, BAN, 3.17% due 10/30/1996 (c) 2,501
Iredell County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds:
4,000 (Purina Mills Inc. Project), VRDN, AMT, 3.45% due 7/01/2020 (a) 4,000
8,300 (Rubbermaid Specialty Products, Inc.), 4.25% due 6/01/1996 8,300
3,700 Lenoir County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (West Co. Nebraska, Inc. Project), VRDN,
3.40% due 10/01/2005 (a) 3,700
9,100 Lincoln County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (Hof Textiles Inc. Project), VRDN, AMT,
3.30% due 10/01/2011 (a) 9,100
Mecklenberg County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds, VRDN (a):
2,000 (Edgecomb Metals Company Project), 3.30% due 12/01/2009 2,000
900 (Flawa Corporation Project), AMT, 3.45% due 12/01/2008 900
1,500 (Griffith Micro Science Project), AMT, 3.50% due 11/01/2007 1,500
4,700 Mecklenberg County, North Carolina, Lease Revenue Bonds (The Young Mens
Christian), VRDN, 3.50% due 2/01/2016 (a) 4,700
1,000 Mecklenburg County, North Carolina, UT, Series A and B, 6.60% due 4/01/1997 1,030
1,055 New Hanover County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Interroll Corp. Project),
VRDN, 3.65% due 11/01/2003 (a) 1,055
North Carolina Eastern Municipal Power Agency, Power System Revenue
Bonds, Series B, CP:
5,800 3.35% due 4/08/1996 5,800
5,800 3.35% due 4/09/1996 5,800
North Carolina Educational Facilities Finance Agency Revenue Bonds,
VRDN (a):
3,900 (Duke University Project), Series A, 3.25% due 12/01/2017 3,900
1,500 (Duke University Project), Series A, 3.25% due 6/01/2027 1,500
2,700 (Wake Forest University Project), 3.30% due 1/01/2009 2,700
North Carolina Medical Care Commission, Hospital Revenue Bonds, VRDN (a):
8,200 (Carol Woods Project), 3.55% due 4/01/2021 8,200
3,300 (Duke University Hospital), Series B, 3.25% due 6/01/2015 3,300
3,500 (Duke University Hospital), Series C, 3.25% due 6/01/2015 3,500
2,130 (Duke University Hospital), Series D, 3.25% due 6/01/2015 2,130
7,000 (Pooled Equipment Financing Project), 3.35% due 12/01/2025 (b) 7,000
200 Refunding (Moses H. Cone Memorial Hospital Project), 3.35% due
10/01/2023 200
North Carolina Municipal Power Agency, Electric Revenue Bonds (No. 1
Catawba), CP:
11,000 3.70% due 4/10/1996 11,000
10,000 3.40% due 6/21/1996 10,000
15,000 3.45% due 7/16/1996 15,000
15,000 3.40% due 8/21/1996 15,000
</TABLE>
<PAGE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONCLUDED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
North Carolina $ 2,000 North Carolina State Port Authority, Docks and Wharves Facility Revenue
(concluded) Bonds(Morehead City Terminals), VRDN, AMT, 3.65% due 1/01/2016 (a) $ 2,000
1,000 Orange County, North Carolina, GO, UT, 5.30% due 2/01/1997 1,015
7,200 Person County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, Solid Waste Disposal Revenue Bonds (Carolina Power
and Light Company), VRDN, AMT, DATES, 3.35% due 11/01/2016 (a) 7,200
1,405 Piedmont Triad Airport Authority, North Carolina, Special Facility Revenue
Bonds(Purpose-Cessna Aircraft Company Project), VRDN, AMT, 3.65% due
10/01/2012 (a) 1,405
1,000 Raleigh, North Carolina, Public Improvement Bonds, UT, 6.80% due
2/01/1997 1,031
Raleigh-Durham, North Carolina, Airport Authority, Special Facility
Revenue Refunding Bonds (American Airlines), VRDN (a):
3,600 Series A, 3.50% due 11/01/2005 3,600
7,500 Series B, 3.50% due 11/01/2015 7,500
700 Rowan County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Reynolds Metals Company
Project), 3.70% due 6/01/1996 700
7,900 Union County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR, Refunding (Square D Co. Project), VRDN, 3.30%
due 3/01/2003 (a) 7,900
University of North Carolina, Chapel Hill School of Medicine and
Ambulatory Care Clinic Revenue Bonds, VRDN (a):
1,600 3.40% due 10/01/2002 1,600
3,000 3.30% due 7/01/2012 3,000
4,500 Wake County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (Carolina Power and Light Company
Project), VRDN, Series C, 3.65% due 10/01/2015 (a) 4,500
2,000 Wayne County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, Revenue Refunding Bonds (General Signal),
VRDN, 3.35% due 12/01/2000 (a) 2,000
800 Wilson County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, IDR (North Carolina Chip Co. Project), VRDN,
3.65% due 1/01/2000 (a) 800
1,350 Winston-Salem, North Carolina, Urban Redevelopment, Mortgage Revenue
Refunding Bonds (Summit Square Garden Apartments), CP, 3.30% due
4/24/1996 1,350
6,000 Winston-Salem, North Carolina, Water and Sewer System Revenue Bonds, CP,
3.30% due 4/24/1996 6,000
<PAGE>
Puerto Rico-- Puerto Rico Commonwealth, Government Development Bank, Revenue Bonds, CP:
4.8% 5,000 3.20% due 4/24/1996 5,000
3,500 3.20% due 5/21/1996 3,500
Puerto Rico Industrial, Medical and Environmental Pollution Control
Facilities Financing Authority Revenue Bonds:
1,750 (Abbott Labs Project), 3.41% due 3/01/1997 1,752
2,940 (Dickinson & Co.), 3.50% due 3/01/1997 2,942
Total Investments (Cost--$271,374*)--99.1% 271,374
Other Assets Less Liabilities--0.9% 2,536
--------
Net Assets--100.0% $273,910
========
<FN>
(a)The interest rate is subject to change periodically based on
certain indexes. The interest rate shown is the interest rate in
effect at March 31, 1996.
(b)MBIA Insured.
(c)Bank Qualified.
(d)AMBAC Insured.
*Cost for Federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 31, 1996
<S> <C> <C>
Assets:
Investments, at value (identified cost--$271,374,281) (Note 1a) $ 271,374,281
Cash 76,716
Receivables:
Securities sold $ 1,770,000
Interest 946,059 2,716,059
-------------
Deferred organization expenses (Note 1d) 1,243
Prepaid registration fees and other assets (Note 1d) 33,851
-------------
Total assets 274,202,150
-------------
Liabilities:
Payables:
Investment adviser (Note 2) 111,678
Distributor (Note 2) 91,389
Dividends to shareholders (Note 1e) 125 203,192
-------------
Accrued expenses and other liabilities 88,539
-------------
Total liabilities 291,731
-------------
Net Assets $ 273,910,419
=============
Net Assets Consist of:
Shares of beneficial interest, $0.10 par value, unlimited number of shares authorized $ 27,394,679
Paid-in capital in excess of par 246,552,109
Accumulated realized capital losses--net (Note 4) (36,369)
-------------
Net Assets--Equivalent to $1.00 per share based on 273,946,788 shares of beneficial
interest outstanding $ 273,910,419
=============
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1996
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 10,007,334
<PAGE>
Expenses:
Investment advisory fees (Note 2) $ 1,326,840
Distribution fees (Note 2) 330,722
Transfer agent fees (Note 2) 79,231
Accounting services (Note 2) 62,279
Professional fees 51,952
Registration fees (Note 1d) 45,482
Printing and shareholder reports 27,425
Custodian fees 26,659
Pricing fees 8,170
Amortization of organization expenses (Note 1d) 8,119
Trustees' fees and expenses 3,299
Other 5,625
-------------
Total expenses before reimbursement 1,975,803
Reimbursement of expenses (Note 2) (137,989)
-------------
Total expenses after reimbursement 1,837,814
-------------
Investment income--net 8,169,520
Realized Loss on Investments--Net (Note 1c) (7,855)
-------------
Net Increase in Net Assets Resulting from Operations $ 8,161,665
=============
</TABLE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
STATEMENTS OF CHANGES INNET ASSETS
<CAPTION>
For the Year Ended March 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <C> <C>
Operations:
Investment income--net $ 8,169,520 $ 7,592,481
Realized loss on investments--net (7,855) (13,460)
------------- -------------
Net increase in net assets resulting from operations 8,161,665 7,579,021
------------- -------------
Dividends to Shareholders (Note 1e):
Investment income--net (8,169,520) (7,592,405)
------------- -------------
Net decrease in net assets resulting from dividends to shareholders (8,169,520) (7,592,405)
------------- -------------
<PAGE>
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 854,050,473 924,263,338
Net asset value of shares issued to shareholders in reinvestment
of dividends (Note 1e) 8,167,035 7,592,507
------------- -------------
862,217,508 931,855,845
Cost of shares redeemed (867,003,212) (946,590,315)
------------- -------------
Net decrease in net assets derived from beneficial interest transactions (4,785,704) (14,734,470)
------------- -------------
Net Assets:
Total decrease in net assets (4,793,559) (14,747,854)
Beginning of year 278,703,978 293,451,832
------------- -------------
End of year $ 273,910,419 $ 278,703,978
============= =============
See Notes to Financial Statements.
</TABLE>
<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: 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
Investment income--net .03 .03 .02 .02 .03
-------- -------- -------- -------- --------
Total from investment operations .03 .03 .02 .02 .03
-------- -------- -------- -------- --------
Less dividends from investment income--net (.03) (.03) (.02) (.02) (.03)
-------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Investment Return 3.13% 2.61% 1.85% 2.25% 3.49%*
======== ======== ======== ======== ========
Ratios to Average Net Assets:
Expenses, net of reimbursement .69% .62% .61% .57% .45%*
======== ======== ======== ======== ========
Expenses .74% .72% .71% .73% .83%*
======== ======== ======== ======== ========
Investment income--net 3.08% 2.58% 1.84% 2.20% 3.25%*
======== ======== ======== ======== ========
<PAGE>
Supplemental Data:
Net assets, end of period (in thousands) $273,910 $278,704 $293,452 $235,384 $221,060
======== ======== ======== ======== ========
<FN>
*Annualized.
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
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.
<PAGE>
(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 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.
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., 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.
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 the year which will cause such
expenses to exceed the pro rata expense limitation at the time of
such payment. For the year ended March 31, 1996, FAM earned fees of
$1,326,840, of which $137,989 was voluntarily waived.
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
<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.
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, MLPF&S, 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, 1996, 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.
<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, 1996, 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 four-year period then ended and for 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.
<PAGE>
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, 1996 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 North Carolina Municipal Money Fund of CMA Multi-State Municipal
Series Trust as of March 31, 1996, 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, 1996
</AUDIT-REPORT>
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 its taxable year ended March 31, 1996 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.
<PAGE>
