CMA
CMA Arizona
Municipal Money Fund
Semi-Annual Report
September 30, 1994
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.
CMA Arizona
Municipal Money Fund
Box 9011
Princeton, NJ 08543-9011
TO OUR SHAREHOLDERS:
For the six-month period ended September 30, 1994, CMA Arizona
Municipal Money Fund paid shareholders a net annualized yield of
2.32%*. As of September 30, 1994, the Fund's 7-day yield was 3.07%.
<PAGE>
The Environment
Concerns of increasing inflationary pressures continued to prompt
volatility in the US stock and bond markets during the July--
September period. In addition, the weakness of the US dollar in
foreign exchange markets caused intermittent stock and bond market
declines during the period. While the immediate concerns regarding
the US dollar had diminished by late July, the possibility of
continued tightening by the Federal Reserve Board persisted for most
of the period. However, a lower-than-expected rate of growth
reported for the US economy during the second calendar quarter
allayed inflationary concerns to some degree, despite the fifth
increase this year in short-term interest rates made by the central
bank in mid-August. Inflationary expectations surfaced again with
the announcement of significant upward revision in industrial
production and capacity utilization for the May--July period. When
the central bank did not raise short-term interest rates at the late
September Federal Open Market Committee meeting, financial markets
rallied on the expectation that the US economy was not overheating
and therefore significant further monetary policy tightening would
not be necessary.
Despite the stronger-than-expected industrial production results,
other economic data suggest that while the economic recovery is
continuing, it is losing some momentum. Consumer spending is
increasing, but at a relatively slow pace, and existing home sales
may have peaked. Inflation remains subdued at the retail level. In
the industrial sector, the sharp increase in manufacturing
production in August was largely the result of a strong increase in
motor vehicle assemblies, which may level off in the weeks ahead. On
balance, it appears that the growth in US industry is progressing at
a steady, modest rate.
Despite evidence of a moderating trend in the US economy, Chairman
Greenspan indicated in his July Humphrey-Hawkins testimony that the
central bank would prefer to err on the side of too much monetary
tightening rather than too little. In the weeks ahead, investors
will continue to assess economic data and inflationary trends in
order to gauge whether further increases in short-term interest
rates are imminent. Continued indications of moderate and
sustainable levels of economic growth would be positive for the US
capital markets.
<PAGE>
Investment Outlook and Strategy
During the six-month period ended September 30, 1994, the US economy
continued to surprise the marketplace with its resiliency.
Manufacturing provided a strong catalyst for growth, and continued
strength in housing and automobile sales provided the impetus for
the Federal Reserve Board to continue the restrictive monetary
policy it initiated in February. This was accomplished by raising
the Federal Funds rate in April by 25 basis points (0.25%) to 3.75%.
More aggressive increases of 50 basis points followed in May and
August, pushing the Federal Funds rate to its current level of
4.75%. In addition, the Federal Reserve Board raised the discount
rate by 50 basis points in both May and August. The yield on the
one-year US Treasury bill rose approximately 155 basis points to
5.95% by September 30, 1994.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
During the six-month period ended September 30, 1994, the State of
Arizona continued to maintain solid economic growth. The State is
profiting from a strong high-technology sector, active construction
markets and solid tourism activity. As a result, measured on a year-
over-year basis ending July 1994, Arizona ranked fifth in the
nation, reporting a 4% increase in non-agricultural job growth.
Along with the State's domestic boom, the economy has already seen
some benefit from the passage of the North American Free Trade
Agreement. Currently, 13%--20% of wages earned by Mexicans flows
into the United States primarily in the form of increased retail
sales. Consequently, it is estimated that the border towns in
Arizona take in about $34 million per year from such spending.
However, additional growth for Arizona and other Mexico-US border
towns is likely to rely on the improvement of services such as
transportation and utilities.
In addition, like other states, Arizona is being forced to address
and correct the disparities in the quality of education offered
throughout its many school districts. A ruling that held the State's
method of funding schools as unconstitutional was delivered by the
Arizona Supreme Court in July. Governor Symington said he welcomed
the ruling and that it represents a tremendous opportunity for the
State to come to grips with the entire tax system. The common
problem faced by most states is that a dependence on property taxes
for funding creates inevitable inequities among the districts.
Consequently, less-affluent school districts find it impossible to
issue bonds to expand or improve the quality of their services
because they do not have sufficient property valuation to back the
bonds.
<PAGE>
During the first half of the period, we maintained a relatively
defensive average portfolio maturity, concluding the month of June
in the 25-day range. This was a result of both the lack of short-
term fixed rate supply and the ever-present volatility in the
Treasury market. Additionally, in July the Fund matured $18.5
million of its fixed-rate issues and was mainly invested in variable
rate demand notes and commercial paper. We utilized commercial paper
to allow the Fund to pick up yield by extending out on the yield
curve when appropriate.
During the months of August and September, the State's
municipalities and authorities brought to market their annual
financing for cash flow purposes. This borrowing totaled $187
million and included financing for Pima and Maricopa Counties as
well as the school districts in Maricopa County. In August, we
purchased $11.5 million of Maricopa County Tax Anticipation Notes
which have a 5% coupon and mature on July 28, 1995 at a yield of
4.35%. This provided the Fund with both yield and diversification
while not compromising credit quality.
The Fund ended the period with a relatively neutral average maturity
of 59 days in response to the perception that the Federal Reserve
Board's interest rate hikes may not have been sufficient to slow
down a growing US economy. We will continue to maintain the
portfolio's average maturity in this range until a clearer picture
emerges as to the direction of interest rates.
In Conclusion
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
October 26, 1994
<PAGE>
Portfolio Abbreviations for CMA Arizona Municipal Money Fund
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
CP Commercial Paper
DATES Daily Adjustable Tax-Exempt Securities
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
TAN Tax Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
CMA ARIZONA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1994 (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Arizona-- $ 3,700 Arizona Educational Loan Marketing Corp., Educational Loan Revenue Bonds,
95.1% VRDN, AMT, Series A, 3.75% due 3/01/2015 (a) $ 3,700
Arizona Health Facilities Authority Revenue Bonds (Arizona Voluntary
Hospital Federation), VRDN (a):
1,475 Series A, 3.60% due 10/01/2015 1,475
1,245 Series B, 3.60% due 10/01/2015 1,245
1,500 Casa Grande, Arizona, IDA, Revenue Bonds (Mayville Project), VRDN, 3.50%
due 7/01/2015(a) 1,500
1,000 Cochise County, Arizona, Pollution Control, Solid Waste Disposal Revenue
Bonds (Arizona Electric Power Cooperative, Inc. Project), AMT, 3.80% due
3/01/1995 1,000
500 Flagstaff, Arizona, IDA, IDR (W.L. Gore & Associates), CP, 3.10% due 12/06/1994 500
2,000 Glendale, Arizona, IDA, Hospital Revenue Bonds (Flexible Dem-West Valley
Camelback), VRDN, 3.55% due 11/01/2011 (a) 2,000
2,200 Glendale, Arizona, IDA, IDR (Superior Bedding Co. Project), VRDN, 3.60% due
10/01/2014 (a) 2,200
1,800 Maricopa County, Arizona, IDA, Hospital Facilities Revenue Bonds (Samaritan
Health Service Hospital), VRDN, Series B2, 3.60% due 12/01/2008 (a) 1,800
Maricopa County, Arizona, IDA, M/F Housing Revenue Bonds, AMT, VRDN (a):
3,700 (Privado Park Apartments Project), Series A, 3.85% due 6/01/2034 3,700
3,300 (Vista Ventana Apartments Project), Series D, 3.85% due 6/01/2034 3,300
200 Maricopa County, Arizona, IDA, PCR (Motorola Inc. Project), VRDN, 3.40%
due 10/01/1995 (a) 200
Maricopa County, Arizona, Pollution Control Corp., PCR, Refunding (Arizona
Public Service Co.), VRDN (a):
2,600 Series C, 3.80% due 5/01/2029 2,600
1,000 Series D, 3.95% due 5/01/2029 1,000
200 Series E, 3.45% due 5/01/2029 200
Maricopa County, Arizona, Pollution Control Corp., PCR, Southern California
Edison Co. (Palo Verde Project), CP:
700 Series B, 3.10% due 11/15/1994 700
1,500 Series B, 3.10% due 11/17/1994 1,500
500 Series B, 3.15% due 11/17/1994 500
500 Series D, 2.90% due 10/17/1994 500
600 Series E, 3.25% due 11/14/1994 600
11,500 Maricopa County, Arizona, TAN, CP, 5% due 7/28/1995 11,559
Mohave County, Arizona, IDA, IDR (Citizens Utilities), AMT, CP:
1,000 3% due 10/14/1994 1,000
3,900 3.05% due 10/18/1994 3,900
</TABLE>
<PAGE>
<TABLE>
CMA ARIZONA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1994 (CONCLUDED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Arizona $ 3,600 Phoenix, Arizona, UT, VRDN, Series 1, 3.80% due 6/01/2018 (a) $ 3,600
(concluded) 700 Pima County, Arizona, IDA, M/F Housing Revenue Bonds (Quail Ridge
Apartments), VRDN, Series B, 3.25% due 6/01/2034 (a) 700
1,650 Pima County, Arizona, IDA, Refunding (Tuscon Retirement Center), VRDN, 3.70%
due 1/01/2009 (a) 1,650
3,800 Pinal County, Arizona, IDA, IDR (Calsonic Inc. Project), VRDN, 3.80% due
12/01/2005 (a) 3,800
500 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont Mining Corp.
Project), DATES, 3.80% due 12/01/2009 (a) 500
900 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont Mining Corp.
Project), VRDN, 3.80% due 12/01/2009 (a) 900
Salt River Project, Arizona, Agricultural Improvements and Power Distribution,
Electric System Revenue Bonds, CP:
3,500 3.30% due 11/14/1994 3,500
400 3.15% due 11/15/1994 400
Special Fund of Industrial Community, Arizona, COP, TAN, CP, Refunding Bonds:
500 3.10% due 10/18/1994 500
1,500 3.40% due 11/15/1994 1,500
1,000 3.10% due 11/17/1994 1,000
2,400 3.15% due 11/18/1994 2,400
1,500 3.25% due 12/01/1994 1,500
1,155 Tucson, Arizona, M/F, IDA, Revenue Refunding Bonds (Lincoln Garden
Project), VRDN, 3.65% due 2/01/2006 (a) 1,155
1,900 Yavapai County, Arizona, IDA, IDR (Citizens Utilities), CP, AMT, 3%
due 10/19/1994 1,900
3,200 Yavapai County, Arizona, IDA, IDR, Refunding (Kachina Pointe Project),
VRDN, 3.70% due 1/01/2009 (a) 3,200
500 Yuma, Arizona, IDA, IDR (Ardco Inc. Project), VRDN, 3.80% due
7/01/2003 (a) 500
Puerto Rico-- 3,500 Commonwealth of Puerto Rico, Government Development Bank, Revenue
4.4% Refunding Bonds, VRDN, 3.55% due 12/01/2015 (a) 3,500
Total Investments (Cost--$78,884*)--99.5% 78,884
Other Assets Less Liabilities--0.5% 392
---------
Net Assets--100.0% $ 79,276
=========
<FN>
(a)The interest rate is subject to change periodically based on
certain indexes. The interest rates shown are the interest rates in
effect at September 30, 1994.
*Cost for Federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CMA ARIZONA MUNICIPAL MONEY FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1994
<CAPTION>
<S> <C> <C>
Assets:
Investments, at value (identified cost--$ 78,884,325) (Note 1a) $ 78,884,325
Cash 102,479
Interest receivable 345,129
Deferred organization expenses (Note 1d) 27,119
Prepaid registration fees and other assets (Note 1d) 14,719
-------------
Total assets 79,373,771
-------------
Liabilities:
Payables:
Distributor (Note 2) $ 18,971
Investment adviser (Note 2) 13,250 32,221
-------------
Accrued expenses and other liabilities 65,759
-------------
Total liabilities 97,980
-------------
Net Assets $ 79,275,791
=============
Net Assets Consist of:
Shares of beneficial interest, $0.10 par value, unlimited number of shares $ 7,927,336
authorized
Paid-in capital in excess of par 71,346,021
Undistributed realized capital gains--net 2,434
-------------
Net Assets--Equivalent to $1.00 per share based on 79,273,357 shares of beneficial
interest outstanding $ 79,275,791
=============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CMA ARIZONA MUNICIPAL MONEY FUND
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1994
<CAPTION>
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 1,124,615
Expenses:
Investment advisory fees (Note 2) $ 194,908
Distribution fees (Note 2) 48,351
Professional fees 25,716
Registration fees (Note 1d) 21,466
Printing and shareholder reports 13,956
Accounting services (Note 2) 11,998
Transfer agent fees (Note 2) 11,493
Custodian fees 6,155
Amortization of organization expenses (Note 1d) 4,188
Pricing fees 3,267
Trustees' fees and expenses 514
Other 2,336
-------------
Total expenses before reimbursement 344,348
Reimbursement of expenses (Note 2) (126,252)
-------------
Total expenses after reimbursement 218,096
-------------
Investment income--net 906,519
Realized Gain on Investments--Net (Note 1c) 2,450
-------------
Net Increase in Net Assets Resulting from Operations $ 908,969
=============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CMA ARIZONA MUNICIPAL MONEY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the Year
Months Ended Ended
Sept. 30, March 31,
Increase (Decrease) in Net Assets: 1994 1994
<S> <C> <C>
Operations:
Investment income--net $ 906,519 $ 1,017,503
Realized gain on investments--net 2,450 --
------------- -------------
Net increase in net assets resulting from operations 908,969 1,017,503
------------- -------------
Dividends and Distributions to Shareholders (Note 1e):
Investment income--net (906,519) (1,017,503)
Realized gain on investments--net -- (330)
------------- -------------
Net decrease in net assets resulting from dividends
and distributions to shareholders (906,519) (1,017,833)
------------- -------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 175,307,348 293,866,100
Net asset value of shares issued to shareholders in reinvestment of
dividends (Note 1e) 906,502 1,017,845
------------- -------------
176,213,850 294,883,945
Cost of shares redeemed (170,354,487) (262,907,118)
------------- -------------
Net increase in net assets derived from beneficial interest transactions 5,859,363 31,976,827
------------- -------------
Net Assets:
Total increase in net assets 5,861,813 31,976,497
Beginning of period 73,413,978 41,437,481
------------- -------------
End of period $ 79,275,791 $ 73,413,978
============= =============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CMA ARIZONA MUNICIPAL MONEY FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
For the
For the For the Period
The following per share data and ratios have been derived Six Months Year Feb. 8,
from information provided in the financial statements. Ended Ended 1993++ to
Sept. 30, March 31, March 31,
Increase (Decrease) in Net Asset Value: 1994 1994 1993
<S> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------
Investment income--net .01 .02 .002
------------ ------------ ------------
Total from investment operations .01 .02 .002
------------ ------------ ------------
Less dividends:
Investment income--net (.01) (.02) (.002)
------------ ------------ ------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
============ ============ ============
Total Investment Return 2.32%* 1.90% 1.78%*
============ ============ ============
Ratios to Average Net Assets:
Expenses, net of reimbursement and excluding distribution fees .44%* .47% .33%*
============ ============ ============
Expenses, net of reimbursement .56%* .59% .46%*
============ ============ ============
Expenses .88%* .98% 1.15%*
============ ============ ============
Investment income--net 2.33%* 1.89% 1.86%*
============ ============ ============
Supplemental Data:
Net assets, end of period (in thousands) $ 79,276 $ 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 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>
2. Investment Advisory Agreement
and Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, L.P. ("FAM"). The general partner of FAM is
Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co. ("ML & Co."). The limited partners
are ML & Co. and Fund Asset Management, Inc. ("FAMI"), 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 six months ended September 30, 1994, FAM earned
fees of $194,908, of which $126,252 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)
<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, FAMI, 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.
CMA ARIZONA 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
Kevin A. Schiatta--Vice President
Helen Marie Sheehan--Vice President
Gerald M. Richard--Treasurer
Robert Harris--Secretary
<PAGE>
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].
