CMA
CMA ARIZONA
MUNICIPAL MONEY FUND
Annual Report
March 31, 1994
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, Massachusetts 02101
Transfer Agent
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].
<PAGE>
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 con-
sidered 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 Arizona
Municipal Money Fund
Box 9011
Princeton, NJ 08543-9011
TO OUR SHAREHOLDERS:
For the year ended March 31, 1994, CMA Arizona Municipal Money
Fund paid shareholders a net annualized yield of 1.90%*. As of
March 31, 1994, the Fund's 7-day yield was 1.78%.
The Environment
Inflationary expectations changed sharply during the March
quarter. Following better-than-expected economic results, Federal
Reserve Board Chairman Alan Greenspan indicated in Congressional
testimony in January that continued strong expansion of the
economy would lead the central bank to tighten monetary policy in
an effort to control inflation. On February 4, 1994, the central
bank broke with tradition and publicly announced a modest 25
basis point (0.25%) increase in short-term interest rates. At the
March 22 meeting of the Federal Open Market Committee, the
Federal Reserve Board again raised the Federal Funds rate by 25
basis points, and also announced the increase.
<PAGE>
Rather than view the Federal Reserve Board's first tightening
move as a preemptive strike against inflation, fixed-income
investors focused on Chairman Greenspan's implicit promise of
further tightening should the rate of inflation accelerate, and
bond prices declined sharply. The setback in the bond market was
also reflected in greater stock market volatility. While the
second increase in the Federal Funds rate was less of a surprise,
investors remained concerned that interest rates would trend
upward sharply. As a result, stock and bond prices continued to
decline through the end of March. The volatility in the US
capital markets was mirrored in international markets. Political
and economic developments, along with concerns of heightened
global inflationary pressures, led to a sell-off in most capital
markets, especially the emerging markets that had appreciated
strongly in 1993.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
In the weeks ahead, investors will continue to gauge the pace of
the economic expansion and watch for signs of an overheating
economy. At this time, there is little evidence that the rate of
inflation will increase rapidly. Therefore, although the secular
long-term trend toward lower interest rates may be over, it is not
yet certain whether the pace of economic activity will accelerate
to the point where significant Federal Reserve Board tightening
will be necessary to contain inflation.
Investment Outlook and Strategy
As the current recovery begins to solidify, the State of Arizona
is experiencing growth in both the construction and manufacturing
industries for the first time in a decade. Within the last year,
the Commerce Department attracted over 50 new companies to the
State. In addition, a number of other companies such as Discover
Card and American Express have expanded their existing
operations. Consequently, Arizona is expected to lead the Western
states in 1994 with a forecast 7.5% increase in personal income
growth.
<PAGE>
Recently, Governor Symington called on Arizona lawmakers to
approve a $4.08 billion operating budget for fiscal year 1995.
The budget encompasses the proposed 1994 Middle Income Tax Relief
Act, providing for $100 million in income tax cuts for taxpayers
at all levels. The Governor also recommends tax relief in the
amount of $20 million for the counties with the highest property
tax rates. In addition, the proposal provides $147 million of
additional State funding for education, the greatest single-year
increase in over ten years. The proposed spending increase and
tax cuts are expected to be offset by a significant increase in
tax-based revenues resulting from the State's continued economic
expansion. Consequently, the budget is expected to leave an
ending cash surplus of $29.6 million at fiscal year-end 1994.
At the outset of the March period, the Fund maintained a
relatively aggressive average maturity given the expected lack of
short-term issuance at the beginning of 1994. Subsequently, with
the expectation that the Federal Reserve Board would tighten
monetary policy, the Fund decreased its average maturity to take
advantage of anticipated higher interest rates during the second
half of the period. CMA Arizona Municipal Money Fund's average
maturity, which began the period in the 70-day range, concluded
the period in the 50-day range. We continue to monitor the
marketplace for opportunities that offer shareholders an
attractive tax-exempt yield, while credit quality and
diversification remain paramount in importance.
We thank you for your support of CMA Arizona 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 3, 1994
<PAGE>
IMPORTANT TAX INFORMATION
All of the net investment income distributions paid daily by CMA
Arizona Municipal Money Fund of CMA Multi-State Municipal Series
Trust during the taxable year ended March 31, 1994 qualify as
tax-exempt interest dividends for Federal income tax purposes.
Additionally, the Fund distributed short-term capital gains of
$0.000006 per share to shareholders of record on December 31,
1993. There were no long-term capital gains distributed during
the Fund's taxable year ended March 31, 1994.
Please retain this information for your records.
Portfolio Abbreviations for CMA Arizona Municipal Money Fund
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
CP Commercial Paper
DDN Daily Demand Notes
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
TAN Tax Anticipation Notes
TRAN Tax Revenue Anticipation Notes
VRDN Variable Rate Demand Notes
<PAGE>
CMA ARIZONA MUNICIPAL MONEY FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Arizona-- Arizona Educational Loan Marketing Corp., Educational Loan Revenue Bonds,
91.8% VRDN, AMT (a):
$2,600 Series A, 2.35% due 3/01/2015 $ 2,600
2,700 Series A, 2.35% due 12/01/2020 2,700
1,100 Series D, 2.50% due 12/01/2008 1,100
Arizona Health Facilities Authority Revenue Bonds (Arizona Voluntary Hospital
Federation), VRDN (a):
1,150 Series A, 2.25% due 10/01/2015 1,150
795 Series B, 2.25% due 10/01/2015 795
l,000 Arizona State Transportation Board, Highway Revenue Bonds, 7.10% due
7/01/1994 1,010
1,500 Casa Grande, Arizona, IDA, Revenue Bonds (Mayville Project), VRDN, 2.40%
due 7/01/2015 (a) 1,500
350 Flagstaff, Arizona, IDA, IDR (W.L. Gore & Associates), 2.70% due 6/07/1994 350
1,900 Glendale, Arizona, IDA, Hospital Revenue Bonds (Flexible Dem-West Valley
Camelback), VRDN, 2.20% due 11/01/2011 (a) 1,900
870 Maricopa County, Arizona, IDA, Health Facilities Revenue Bonds (Catholic H.C.
West), Series A, 3% due 7/01/1994 870
480 Maricopa County, Arizona, IDA, Health Facilities Revenue Refunding Bonds
(Catholic Healthcare), Series A, 3% due 7/01/1994 481
200 Maricopa County, Arizona, Pollution Control Corp., IDA, PCR (Motorola Inc.
Project), VRDN, 2.20% due 10/01/1995 (a) 200
Maricopa County, Arizona, Pollution Control Corp., PCR, Arizona Public Service
Co. (Palo Verde Project), VRDN (a):
3,000 2.25% due 12/01/2009 3,000
3,600 2.30% due 12/01/2009 3,600
Maricopa County, Arizona, Pollution Control Corp., PCR, Southern California
Edison Co. (Palo Verde Project), CP:
1,500 Series B, 2.55% due 5/19/1994 1,500
500 Series D, 2.60% due 6/17/1994 500
600 Series E, 2.70% due 6/14/1994 600
500 Series G, 2.50% due 4/12/1994 500
2,000 Maricopa County, Arizona, School District Number-11 (Peoria), TAN, 3.375% due
7/29/1994 2,003
1,165 Maricopa County, Arizona, School District Number-40, Refunding Bonds
(Glendale), 3.10% due 7/01/1994 1,165
</TABLE>
CMA ARIZONA MUNICIPAL MONEY FUND
<PAGE>
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONCLUDED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Arizona $1,000 Maricopa County, Arizona, School District Number-41 (Gilbert), TAN, 3.375% due
(concluded) 7/29/1994 $ 1,002
2,300 Maricopa County, Arizona, TAN, 3.10% due 7/29/1994 2,302
2,000 Mesa, Arizona, Utility Systems Revenue Refunding Bonds, 8.50% due 7/01/1994 2,029
Mohave County, Arizona, IDA, IDR (Citizens Utilities), AMT, CP:
1,000 2.60% due 6/14/1994 1,000
1,100 2.55% due 6/15/1994 1,100
2,800 2.90% due 6/15/1994 2,800
5,800 Phoenix, Arizona, AMT, DDN, Series 1, 3.25% due 6/01/2016 (a) 5,800
1,650 Pima County, Arizona, IDA, IDR, Refunding (Tucson Retirement Center), VRDN,
1.90% due 1/01/2009 (a) 1,650
4,850 Pima County, Arizona, TAN, Series A, 3.25% due 7/28/1994 4,859
2,500 Pinal County, Arizona, IDA, IDR (Calsonic Inc. Project), VRDN, 2.35% due
12/01/2005 (a) 2,500
1,400 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont Mining Corp. Project),
VRDN, 2.90% due 12/01/2009 (a) 1,400
1,200 Pinal County, Arizona, IDA, PCR (Newmont), DDN, 2.90% due 12/01/2009 (a) 1,200
Salt River Project, Arizona, Agricultural Improvements and Power Distribution,
Electric System Revenue Bonds, CP:
700 2.70% due 6/14/1994 700
2,000 2.70% due 6/17/1994 2,000
1,500 2.75% due 6/23/1994 1,500
Special Fund of Industrial Community, Arizona, COP, TAN, CP:
2,300 2.40% due 5/02/1994 2,300
500 2.55% due 4/11/1994 500
880 Tempe, Arizona, Refunding Bonds, 4.75% due 7/01/1994 884
1,000 Tempe, Arizona, Union High School District Number 213, Refunding Bonds,
2.80% due 7/01/1994 1,000
1,500 Tucson, Arizona, M/F, IDA, Revenue Refunding Bonds (Lincoln Garden Project),
VRDN, 2.20% due 2/01/2006 (a) 1,500
1,900 Yavapai County, Arizona, IDA, IDR (Citizen Utilities), CP, AMT, 2.80% due
5/19/1994 1,900
Puerto Rico-- 2,500 Commonwealth of Puerto Rico, Goverment Development Bank, Revenue
8.9% Refunding Bonds, VRDN, 2% due 12/01/2015 (a) 2,500
1,000 Commonwealth of Puerto Rico, TRAN, Series A, 3% due 7/29/1994 1,001
3,000 Maritime Shipping Authority of Puerto Rico, CP, 2.60% due 7/21/1994 3,000
Total Investments (Cost--$73,951*)--100.7% 73,951
Liabilities in Excess of Other Assets--(0.7%) (537)
-------
Net Assets--100.0% $73,414
=======
<FN>
(a)The interest rate is subject to change periodically based on certain indexes.
The interest rates shown are the rates in effect at March 31, 1994.
*Cost for Federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
<PAGE>
CMA ARIZONA MUNICIPAL MONEY FUND
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 31, 1994
<S> <C> <C>
Assets:
Investments, at value (identified cost--$73,950,776) (Note 1a) $ 73,950,776
Cash 72,772
Interest receivable 451,087
Deferred organization expenses (Note 1d) 27,119
Prepaid registration fees and other assets (Note 1d) 14,708
-------------
Total assets 74,516,462
-------------
Liabilities:
Payables:
Securities purchased $ 1,028,369
Distributor (Note 2) 11,878
Investment adviser (Note 2) 9,036 1,049,283
-------------
Accrued expenses and other liabilities 53,201
-------------
Total liabilities 1,102,484
-------------
Net Assets $ 73,413,978
=============
Net Assers Consist of:
Shares of beneficial interest, $.10 par value, unlimited number of shares authorized $ 7,341,399
Paid-in capital in excess of par 66,072,595
Accumulated realized capital losses--net (16)
-------------
Net Assets--Equivalent to $1.00 per share based on 73,413,994 shares of beneficial
interest outstanding $ 73,413,978
=============
See Notes to Financial Statements.
</TABLE>
<PAGE>
CMA ARIZONA MUNICIPAL MONEY FUND
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1994
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 1,335,763
Expenses:
Investment advisory fees (Note 2) $ 269,875
Distribution fees (Note 2) 67,140
Registration fees (Note 1d) 63,585
Professional fees 40,179
Accounting services (Note 2) 33,858
Printing and shareholder reports 22,568
Transfer agent fees (Note 2) 11,369
Amortization of organization expenses (Note 1d) 7,583
Custodian fees 7,170
Pricing fees 3,044
Trustees' fees and expenses 499
Other 426
------------
Total expenses before reimbursement 527,296
Reimbursement of expenses (Note 2) (209,036)
------------
Total expenses after reimbursement 318,260
-------------
Investment income--net 1,017,503
-------------
Net Increase in Net Assets Resulting from Operations $ 1,017,503
=============
See Notes to Financial Statements.
</TABLE>
<PAGE>
CMA ARIZONA MUNICIPAL MONEY FUND
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the
Period
For the Year February 8,
Ended 1993++ to
March 31, March 31,
Increase (Decrease) in Net Asset Value: 1994 1993
<S> <C> <C>
Operations:
Investment income--net $ 1,017,503 $ 93,333
Realized gain on investments--net -- 216
------------ -------------
Net increase in net assets resulting from operations 1,017,503 93,549
------------ -------------
Dividends and Distributions to Shareholders (Note 1e):
Investment income--net (1,017,503) (93,235)
Realized gain on investments--net (330) --
------------ -------------
Net decrease in net assets resulting from dividends and distributions to
shareholders (1,017,833) (93,235)
------------ -------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 293,866,100 73,587,687
Net asset value of shares issued to shareholders in reinvestment of dividends
and distributions (Note 1e) 1,017,845 93,238
------------ -------------
294,883,945 73,680,925
Cost of shares redeemed (262,907,118) (32,343,758)
------------ -------------
Net increase in net assets derived from beneficial interest transactions 31,976,827 41,337,167
------------ -------------
Net Assets:
Total increase in net assets 31,976,497 41,337,481
Beginning of period 41,437,481 100,000
------------ -------------
End of period $ 73,413,978 $ 41,437,481
============ =============
<FN>
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
CMA ARIZONA MUNICIPAL MONEY FUND
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION> For the
Period
For the Year February 8,
The following per share data and ratios have been derived Ended 1993+ to
from information provided in the financial statements. March 31, March 31,
Increase (Decrease) in Net Asset Value: 1994 1993
<S> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 1.00 $ 1.00
------------ ------------
Investment income--net .02 .002
------------ ------------
Total from investment operations .02 .002
------------ ------------
Less dividends:
Investment income--net (.02) (.002)
------------ ------------
Net asset value, end of period $ 1.00 $ 1.00
============ ============
Total Investment Return 1.90% 1.78%*
============ ============
Ratios to Average Net Assets:
Expenses, net of reimbursement and excluding distribution fees .47% .33%*
============ ============
Expenses, net of reimbursement .59% .46%*
============ ============
Expenses .98% 1.15%*
============ ============
Investment income--net 1.89% 1.86%*
============ ============
Supplemental Data:
Net assets, end of period (in thousands) $ 73,414 $ 41,437
============ ============
<FN>
*Annualized.
++Commencement of Operations.
See Notes to Financial Statements.
</TABLE>
<PAGE>
CMA ARIZONA MUNICIPAL MONEY FUND
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
CMA Arizona 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 investment management 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. 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>
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Fund Asset Management, L.P. ("FAM"). Effective January 1, 1994,
the investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc., an indirect wholly-owned subsidiary of
ML & Co. The limited partners are ML & Co. and Merrill Lynch
Investment Management, Inc. ("MLIM"), which is also an indirect
wholly-owned subsidiary of ML & Co.
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. For the year ended March 31,
1994, FAM earned fees of $269,875, of which $209,036 was
voluntarily waived.
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 Investment Adviser during any
year which will cause such expenses to exceed the pro rata
expense limitation at the time of such payment.
CMA ARIZONA MUNICIPAL MONEY FUND
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.
<PAGE>
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, MLIM, 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.
<AUDIT-REPORT>
CMA ARIZONA MUNICIPAL MONEY FUND
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
CMA Arizona 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
Arizona Municipal Money Fund of CMA Multi-State Municipal
Series Trust as of March 31, 1994, the related statements
of operations for the year then ended and changes in net assets
and the financial highlights for the year then ended and for
the period February 8, 1993 (commencement of operations) to
March 31, 1993. 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 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, 1994 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.
<PAGE>
In our opinion, such financial statements and financial
highlights present fairly, in all material respects, the
financial position of CMA Arizona Municipal Money Fund of CMA
Multi-State Municipal Series Trust as of March 31, 1994, 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
Princeton, New Jersey
April 29, 1994
</AUDIT-REPORT>
