CMA
CMA NORTH CAROLINA
MUNICIPAL MONEY FUND
Semi-Annual Report
September 30, 1996
MERRILL LYNCH
BULL LOGO
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.
<PAGE>
CMA North Carolina
Municipal Money Fund
Box 9011
Princeton, NJ 08543-9011
Printed on post-consumer recycled paper
To Our Shareholders:
For the six-month period ended September 30, 1996, CMA North
Carolina Municipal Money Fund paid shareholders a net annualized
yield of 2.79%*. As of September 30, 1996, the Fund's 7-day yield
was 3.01%.
<PAGE>
The Environment
Although the US stock and bond markets rallied late in the six-month
period ended September 30, 1996, much of the period was marked by
volatility in the capital markets. The US economy demonstrated
surprising resilience during the first half of the year. As a
result, when economic data releases appeared to indicate that the US
economy was expanding at a stronger-than-expected (and potentially
inflationary) rate, investors focused on the increasing possibility
of monetary policy tightening by the Federal Reserve Board. During
these periods, stock prices declined and long-term interest rates
moved higher. However, with inflationary pressures still under
control, the US central bank did not tighten monetary policy at its
September 24 meeting. This development, coupled with several
economic data releases that showed growth was at or below
expectations, helped to assuage investors' concerns about an
overheating economy. Stock and bond prices improved, with stock
market averages reaching historic high levels.
The shifts in perceptions were exemplified by investors' reactions
to the release of recent employment reports. Inflationary concerns
were heightened in early July with the release of a stronger-than-
expected employment report for June. However, more subdued job
growth and decelerating hourly wage gains were subsequently reported
for the month of July. Although the employment report for August
showed that unemployment had dropped to its lowest level since 1989,
these results were generally in line with expectations, and were
received favorably by investors. The greatest boost in investor
confidence occurred in early October with the release of September's
employment report, which showed a slight increase in unemployment.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
Investors will continue to monitor economic data releases to
determine the probable direction of the US economy. The outcome of
the upcoming November election will also increasingly influence
investor psychology in the weeks ahead.
Investment Outlook and Strategy
During the six months ended September 30, 1996, North Carolina's
economy continued to show signs of strength. For example, the
State's unemployment rate in June was reported at 4.2%, decreasing
0.1% from one year ago. This was below the national unemployment
rate of 5.3%, which was also slightly less than one year ago.
Additionally, the State's July non-farm employment increased 1.9%
from last year, for an increase of nearly 67,000 jobs. Moreover, the
State's July residential building permits, which reflect future
construction activity, increased by 37.3% as compared to July 1995.
<PAGE>
As the second half of the year began, the State stood to lose its
ability to provide incentives for corporations to relocate and
conduct business there. This is in response to the fact that during
July, the North Carolina General Assembly adjourned without passing
a State budget. As a result, some very important issues were left
unresolved. These issues included recommendations to reduce
corporate income tax by 1% as well as provide additional income tax
relief by instituting tax credits. Furthermore, the session also
ended without renewing funds for recruiting new businesses, which
could leave North Carolina at a disadvantage to neighboring South
Carolina, Alabama and Georgia who are luring big corporations with
millions of dollars in cash. In the past three years North
Carolina's business recruiters have handed out more than $12 million
in cash incentives to entice companies.
During the six-month period ended September 30, 1996, the majority
of economic data reported pointed to strong domestic growth. For
example, final revision to second-quarter gross domestic product
showed the economy grew at an impressive 4.7% during this period.
Thus, with the increasing probability that the Federal Reserve Board
would tighten monetary policy, we opted to maintain a relatively
short average portfolio maturity in the 30-day range for the first
half of the six-month period. Additionally, in response to a flat
yield curve during a majority of this period, the Fund benefited by
maintaining a relatively defensive posture. During this time, we
used commercial paper to modestly extend the Fund's maturity when
appropriate as we awaited more attractive fixed-rate yields
resulting from both the anticipation of tighter monetary policy and
traditional market supply during July and August.
As we entered the second half of the six-month period ended
September 30, 1996, it became more evident that the Federal Reserve
Board was comfortable in the fact that current economic growth was
not strong enough to cause any significant inflationary pressures.
Furthermore, with supply entering the market during the second half
of this period, the short-term tax-exempt yield curve steepened,
with interest rates on one-year paper approaching 4.0%. Consequently,
with the expectation that monetary policy may be on hold, we extended
the Fund's average portfolio maturity to the 45-day range by
July 31, 1996. Once again North Carolina's short-term issuance
was meager, limiting the Fund's means of extension during a
majority of this period. During the six-month period ended September
30, 1996, North Carolina's short-term fixed-rate issuance totaled
$56.3 million. Finally, diversification and credit quality remain
paramount 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,
<PAGE>
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Darrin J. San Fillippo)
Darrin J. San Fillippo
Vice President and Portfolio Manager
October 29, 1996
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
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 SEPTEMBER 30, 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--91.3% Control Financing Authority Revenue Bonds (Texasgulf, Inc. Project),
VRDN, 3.90% due 12/01/2000 (a) $ 1,000
1,095 Beaufort County, North Carolina, Refunding and Improvement Bonds, UT,
4% due 2/01/1997 (b) 1,098
6,600 Cabarrus County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, Industrial Revenue Bonds (S&D Coffee Inc.
Project), VRDN, AMT, 3.95% due 9/01/2011 (a) 6,600
3,000 Carteret County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, PCR (Texasgulf, Inc. Project), VRDN,
3.80% 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, 4% due 12/01/2009 (a) 800
950 Charlotte, North Carolina, Refunding Bonds, GO, UT, 4.20% due 2/01/1997 953
8,500 Charlotte-Mecklenberg Hospital Authority, North Carolina, Health Care
System Revenue Bonds, VRDN, Series C, 3.85% due 1/15/2026 (a) 8,500
Craven County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Resources Bonds (Cravenwood Energy Project), VRDN, AMT (a):
3,800 Series B, 4% due 5/01/2011 3,800
3,600 Series C, 4% due 5/01/2011 3,600
Cumberland County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, Revenue Refunding Bonds (Monsanto Co.
Project), VRDN (a):
1,715 3.85% due 6/01/2012 1,715
600 3.85% due 10/01/2014 600
Duplin County, North Carolina, Water District, BAN, UT (c):
5,284 Series F, 3.79% due 3/27/1997 5,286
3,501 Series G, 3.85% due 3/27/1997 3,502
Durham County, North Carolina, Public Improvement Bonds, UT:
1,000 7% due 2/01/1997 (e) 1,030
1,000 VRDN, 3.65% due 5/01/2009 (a) 1,000
1,000 VRDN, 3.65% due 5/01/2010 (a) 1,000
1,000 VRDN, 3.65% due 5/01/2011 (a) 1,000
1,000 Forsyth County, North Carolina, GO, UT, 4.70% due 2/01/1997 1,005
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% due 5/01/2004 (a) 2,800
950 Gaston County, North Carolina, Public Improvement Bonds, UT, 4.90% due
3/01/1997 (d) 956
Granville County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds, VRDN, AMT (a):
4,000 (Mayville Metal Production Project), 3.75% due 5/23/2020 4,000
2,155 (Tuscarora Plastics, Inc. Project), 4% due 12/01/2001 2,155
</TABLE>
<PAGE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 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, 3.95% due 11/01/2009 (a) $ 500
Guilford County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds, VRDN, AMT (a):
900 (Pharmagraphics Inc. Project), 4% due 9/01/2010 900
7,500 (US Woven Label Project), 3.95% due 1/01/2013 7,500
27,715 Halifax County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Exempt Facilities-Westmoreland
Project), VRDN, AMT, 4.05% due 12/01/2019 (a) 27,715
5,000 High Point, North Carolina, Public Improvement Bonds, BAN, UT, Series A,
3.75% due 3/12/1997 5,000
Iredell County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds:
4,000 (Purina Mills Inc. Project), VRDN, AMT, 3.95% due 7/01/2020 (a) 4,000
8,300 (Rubbermaid Specialty Products, Inc.), 3.85% due 6/01/1997 8,300
3,700 Lenoir County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (West Co. Nebraska, Inc. Project), VRDN,
3.95% 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,
3.95% due 10/01/2011 (a) 9,100
8,500 Mecklenberg County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, IDR (Rexroth Corporation Project), VRDN,
AMT, 3.95% due 9/01/2016 (a) 8,500
Mecklenberg County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds, VRDN (a):
2,000 (Edgecomb Metals Company Project), 3.80% due 12/01/2009 2,000
900 (Flawa Corporation Project), AMT, 3.70% due 12/01/2008 900
1,500 (Griffith Micro Science Project), AMT, 3.95% due 11/01/2007 1,500
1,000 Mecklenburg County, North Carolina, UT, Series A and B, 6.60% due 4/01/1997 1,015
1,055 New Hanover County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Interroll Corp. Project), VRDN,
4% due 11/01/2003 (a) 1,055
<PAGE>
3,200 North Carolina Eastern Municipal Power Agency, Power System Revenue Bonds,
CP, Series B, 3.60% due 12/11/1996 3,200
North Carolina Educational Facilities Finance Agency Revenue Bonds, VRDN (a):
1,500 (Bowman Grey School of Medicine Project), 3.90% due 9/01/2020 1,500
1,500 (Duke University Project), Series A, 3.75% due 6/01/2027 1,500
North Carolina Medical Care Commission, Hospital Revenue Bonds, VRDN (a):
3,300 (Duke University Hospital Project), Series B, 3.75% due 6/01/2015 3,300
3,500 (Duke University Hospital Project), Series C, 3.75% due 6/01/2015 3,500
2,130 (Duke University Hospital Project), Series D, 3.75% due 6/01/2015 2,130
3,700 (Pooled Financing Project), ACES, 3.80% due 4/01/2012 3,700
200 Refunding (Moses H. Cone Memorial Hospital Project), 3.80% due 10/01/2023 200
North Carolina Municipal Power Agency, Electric Revenue Bonds
(No. 1 Catawba), CP:
7,500 3.50% due 10/11/1996 7,500
7,600 3.50% due 10/23/1996 7,600
5,000 3.70% due 1/10/1997 5,000
8,500 3.65% due 2/10/1997 8,500
2,000 North Carolina State Port Authority, Docks and Wharves Facility Revenue
Bonds (Morehead City Terminals), VRDN, AMT, 4% due 1/01/2016 (a) 2,000
</TABLE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONCLUDED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
North Carolina $ 1,169 Old Fort, North Carolina, BAN, UT, 3.68% due 11/20/1996 (c) $ 1,169
(concluded) 1,000 Orange County, North Carolina, GO, UT, 5.30% due 2/01/1997 1,006
12,000 Person County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, Solid Waste Disposal Revenue Bonds (Carolina Power
and Light Company), DATES, VRDN, AMT, 4.10% due 11/01/2016 (a) 12,000
1,405 Piedmont Triad Airport Authority, North Carolina, Special Facility Revenue
Bonds (Purpose-Cessna Aircraft Company Project), VRDN, AMT, 4% due
10/01/2012 (a) 1,405
1,000 Raleigh, North Carolina, Public Improvement Bonds, UT, 6.80% due 2/01/1997 1,012
600 Raleigh-Durham, North Carolina, Airport Authority, Special Facility Revenue
Refunding Bonds (American Airlines), VRDN, Series B, 3.95% due 11/01/2015 (a) 600
700 Rowan County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (Reynolds Metals Company Project),
3.60% due 12/01/1996 700
2,225 Tabor City, North Carolina, BAN, UT, 3.70% due 11/06/1996 (c) 2,225
5,100 University of North Carolina, Chapel Hill School of Medicine and Ambulatory
Care Clinic Revenue Bonds, VRDN, 3.85% due 7/01/2012 (a) 5,100
4,500 Wake County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (Carolina Power and Light Company
Project), VRDN, Series C, 4% 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,
3.90% 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, 4% due
1/01/2000 (a) 800
1,350 Winston-Salem, North Carolina, Urban Redevelopment, Mortgage Revenue
Refunding Bonds (Summit Square Garden Apartments), CP, 3.60% due 10/15/1996 1,350
4,500 Winston-Salem, North Carolina, Water and Sewer System Revenue Bonds, CP,
3.60% due 10/15/1996 4,500
<PAGE>
Puerto Rico-- Puerto Rico Commonwealth, Government Development Bank, CP:
8.3% 3,500 3.60% due 10/01/1996 3,500
4,200 3.50% due 10/15/1996 4,200
4,000 3.60% due 10/24/1996 4,000
4,000 3.70% due 11/07/1996 4,000
Puerto Rico Industrial, Medical and Environmental Pollution Control
Facilities Financing Authority Revenue Bonds:
1,750 (Abbott Labs Project), 3.41% due 3/01/1997 1,751
2,940 (Dickinson & Co.), 3.50% due 3/01/1997 2,941
Total Investments (Cost--$245,474*)--99.6% 245,474
Other Assets Less Liabilities--0.4% 967
--------
Net Assets--100.0% $246,441
========
<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 September 30, 1996.
(b)MBIA Insured.
(c)Bank Qualified.
(d)AMBAC Insured.
(e)Prerefunded.
*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 SEPTEMBER 30, 1996
<S> <C> <C>
Assets:
Investments, at value (identified cost--$245,474,085) (Note 1a) $ 245,474,085
Cash 77,256
Receivables:
Securities sold $ 4,110,211
Interest 1,024,993 5,135,204
-------------
Deferred organization expenses (Note 1d) 1,243
Prepaid registration fees and other assets (Note 1d) 32,916
-------------
Total assets 250,720,704
-------------
Liabilities:
Payables:
Securities purchased 4,000,000
Investment adviser (Note 2) 107,987
Distributor (Note 2) 65,034
Dividends to shareholders (Note 1e) 46
Beneficial interest redeemed 13 4,173,080
-------------
Accrued expenses and other liabilities 106,415
-------------
Total liabilities 4,279,495
-------------
Net Assets $ 246,441,209
=============
Net Assets Consist of:
Shares of beneficial interest, $0.10 par value, unlimited number of
shares authorized $ 24,648,053
Paid-in capital in excess of par 221,832,474
Accumulated realized capital losses--net (Note 4) (39,318)
-------------
Net Assets--Equivalent to $1.00 per share based on 246,480,527 shares of
beneficial interest outstanding $ 246,441,209
=============
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium earned $ 4,756,004
<PAGE>
Expenses:
Investment advisory fees (Note 2) $ 675,977
Distribution fees (Note 2) 166,667
Transfer agent fees (Note 2) 32,528
Accounting services (Note 2) 30,652
Professional fees 24,723
Registration fees (Note 1d) 20,418
Custodian fees 13,331
Printing and shareholder reports 12,155
Pricing fees 3,426
Trustees' fees and expenses 1,296
Amortization of organization expenses (Note 1d) 642
Other 1,668
-------------
Total expenses 983,483
-------------
Investment income--net 3,772,521
Realized Loss on Investments--Net (Note 1c) (2,949)
-------------
Net Increase in Net Assets Resulting from Operations $ 3,769,572
=============
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
September 30, March 31,
Increase (Decrease) in Net Assets: 1996 1996
<S> <C> <C>
Operations:
Investment income--net $ 3,772,521 $ 8,169,520
Realized loss on investments--net (2,949) (7,855)
------------- -------------
Net increase in net assets resulting from operations 3,769,572 8,161,665
------------- -------------
Dividends to Shareholders (Note 1e):
Investment income--net (3,772,521) (8,169,520)
------------- -------------
Net decrease in net assets resulting from dividends to shareholders (3,772,521) (8,169,520)
------------- -------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 354,781,606 854,050,473
Net asset value of shares issued to shareholders in reinvestment of dividends
(Note 1e) 3,772,661 8,167,035
------------- -------------
358,554,267 862,217,508
Cost of shares redeemed (386,020,528) (867,003,212)
------------- -------------
Net decrease in net assets derived from beneficial interest transactions (27,466,261) (4,785,704)
------------- -------------
Net Assets:
Total decrease in net assets (27,469,210) (4,793,559)
Beginning of period 273,910,419 278,703,978
------------- -------------
End of period $ 246,441,209 $ 273,910,419
============= =============
<PAGE>
See Notes To Financial Statements.
</TABLE>
<TABLE>
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
For the
Six
The following per share data and ratios have been derived Months
from information provided in the financial statements. Ended
Sept. 30, For the Year Ended March 31,
Increase (Decrease) in Net Asset Value: 1996 1996 1995 1994 1993
<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 .01 .03 .03 .02 .02
-------- -------- -------- -------- --------
Total from investment operations .01 .03 .03 .02 .02
-------- -------- -------- -------- --------
Less dividends from investment income--net (.01) (.03) (.03) (.02) (.02)
-------- -------- -------- -------- --------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ========
Total Investment Return 2.79%* 3.13% 2.61% 1.85% 2.25%
======== ======== ======== ======== ========
Ratios to Average Net Assets:
Expenses, net of reimbursement .73%* .69% .62% .61% .57%
======== ======== ======== ======== ========
Expenses .73%* .74% .72% .71% .73%
======== ======== ======== ======== ========
Investment income--net 2.78%* 3.08% 2.58% 1.84% 2.20%
======== ======== ======== ======== ========
Supplemental Data:
Net assets, end of period (in thousands) $246,441 $273,910 $278,704 $293,452 $235,384
======== ======== ======== ======== ========
<FN>
*Annualized.
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. 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 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 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>
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.
CMA NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
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.
<PAGE>
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.
CMA NORTH CAROLINA
MUNICIPAL MONEY FUND
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
Darrin J. San Fillippo--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, Massachusetts 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 221-7210*
[FN]
*For inquiries regarding your CMA account, call (800) CMA-INFO
[(800) 262-4636].
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