CMA ARIZONA
MUNICIPAL MONEY FUND
Semi-Annual Report
September 30, 1997
[FUND LOGO]
[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.
CMA Arizona
Municipal Money Fund
Box 9011
Princeton, NJ 08543-9011 16714 -- 9/97
[RECYCLE LOGO] Printed on post-consumer recycled paper
TO OUR SHAREHOLDERS:
For the six-month period ended September 30, 1997, CMA Arizona
Municipal Money Fund paid shareholders a net annualized yield of
3.08%*. As of September 30, 1997, the Fund's 7-day yield was 3.24%.
Economic Environment and Investment Strategy
Arizona continued to be one of the leading states in the nation in
terms of employment and population growth through the first half of
the year. In fact, in 1996 the state ranked second only to Nevada in
terms of job growth. Furthermore, Arizona ranks eighteenth of all
states in total value of international exports, up from twenty first
the previous two years. The state's exports approached $10 billion in
1996, up more than 19% from 1995. The rate of economic growth has
varied throughout the state. For example, Pima and Tucson Counties had
lackluster performances while Maricopa County, led by the greater
Phoenix area, is enjoying its strongest economic boom in history.
Given the rapid growth in the Phoenix area, the county continues to
experience strong retail sales numbers. During last year, the county
posted sales up 8% as compared to 5.5% for the state as a whole. Also
contributing to this growth is a healthy increase in personal income.
Personal income in the greater Phoenix area was up approximately 11%
in 1995 and 8.8% in 1996, according to a study at the University of
Arizona. Consequently, the consensus forecast expects sales to climb
7.3% in 1997. The ratio of per capita income in the greater Phoenix
area to per capita income nationally continues to climb, suggesting
that the quality of jobs is improving. However, despite the optimistic
outlook, state economists agree that the economy has peaked and is
likely to begin to moderate next year.
During the six-month period ended September 30, 1997, the Federal
Reserve Board held monetary policy steady in response to a continuing
stream of favorable inflationary data. However, periods of strong
consumer spending kept the US Treasury market somewhat volatile with
the yield on the benchmark 30-year Treasury bond trading between 6.30%
- -- 7.18%. Nonetheless, conditions affecting short-term municipal bonds
were quite different. For a majority of the six-month period, yields
on one-year fixed-rate notes remained in a much narrower range,
trading between 3.80% -- 3.90%. Furthermore, during most of the period
yields on variable rate demand obligations considerably outperformed
those on fixed-rate issues. The factors contributing to this were an
abundance of new variable rate products coming to market along with
net outflows from tax-exempt money market funds. For example, during
the first half of the six-month period, yields on variable rate
products averaged approximately 20 basis points (0.20%) above the
yields on one-year fixed-rate notes. Thus, when appropriate, we
continued to increase the Fund's concentration in variable rate demand
notes to seek to take advantage of the spread as compared to fixed-
rate notes.
As the second half of the period began, traditional fixed-rate supply
drove up yields on short-term notes to more attractive levels versus
their variable counterparts, providing us with a long-awaited
opportunity to extend the Fund's maturity. We took advantage of this
opportunity in response to the opinion that monetary policy would stay
on hold through year-end and that yields on notes purchased during
this time would outperform variable rate issues over the next six
months. The Fund, which had an average portfolio maturity in the 20-
day range by early to mid-July, ended the period in the 55-day range.
During the six-month period ended September 30, 1997, the state of
Arizona's issuance totaled $62.9 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 support of CMA Arizona Municipal Money Fund, and
we look forward to serving your investment needs in the months and years
ahead.
Sincerely,
/S/ARTHUR ZEIKEL
Arthur Zeikel
President
/S/VINCENT R. GIORDANO
Vincent R. Giordano
Senior Vice President
/S/DARRIN J. SANFILLIPPO
Darrin J. SanFillippo
Vice President and Portfolio Manager
October 31, 1997
* Based on a constant investment throughout the period, with dividends
compounded daily, and reflecting a net return to the investor after
all expenses.
<TABLE>
<CAPTION>
CMA Arizona Municipal Money Fund
Schedule of Investments as of September 30, 1997 (in Thousands)
Face Value
State Amount Issue (Note 1a)
<S> <C> <C> <C>
Arizona -- $700 Apache County, Arizona, IDA, IDR (Tucson Electric Power - Springerville
91.8% Project), VRDN, Series C, 4.15% due 12/15/2018 (a) $700
1,300 Apache County, Arizona, IDA, PCR (Tucson Electric Power), VRDN, Series A,
4.10% due 6/15/2020 (a) 1,300
5,400 Arizona Educational Loan Marketing Corp., Educational Loan Revenue Bonds,
VRDN, AMT, Series A, 4.15% due 3/01/2015 (a)(c) 5,400
2,400 Arizona Health Facilities Authority, Hospital Systems Revenue Bonds (Northern
Arizona Healthcare), VRDN, AMT, Series B, 4.05% due 10/01/2026 (a)(c) 2,400
290 Arizona Health Facilities Authority Revenue Bonds (Arizona Voluntary Hospital
Federation), VRDN, Series B, 4.05% due 10/01/2015 (a)(d) 290
7,000 Cochise County, Arizona, Pollution Control Corp., Solid Waste Disposal
Revenue Bonds (Arizona Electric Power Cooperative, Inc. Project), AMT,
3.80% due 3/01/1998 7,000
Coconino County, Arizona, Pollution Control Corp., Arizona Public Service
Revenue Bonds, VRDN, AMT, Series A (a):
6,710 4.15% due 12/01/2031 6,710
1,800 (Navajo Project), 4.15% due 10/01/2029 1,800
1,850 Coconino County, Arizona, Unified School District No. 1 (Flagstaff), TAN,
Series A, 4.40% due 6/30/1998 1,857
1,465 Maricopa County, Arizona, IDA, IDR (Citizens Utility), CP, 3.85% due 2/04/1998 1,465
Maricopa County, Arizona, IDA, M/F Housing Revenue Bonds, VRDN, AMT (a):
6,200 (Privado Park Apartments Project), Series A, 4.25% due 12/15/2033 6,200
5,200 (Vista Ventana Apartments Project), Series D, 4.25% due 12/15/2033 5,200
2,000 Maricopa County, Arizona, Pollution Control Corp., PCR, CP (Southern
California Edison - Palo Verde Project), Series E, 3.80% due 10/22/1997 2,000
Maricopa County, Arizona, Pollution Control Corp., PCR, Refunding, VRDN (a):
300 (Arizona Public Service Co.), Series E, 4% due 5/01/2029 300
7,000 (El Paso Electric), Series A, 4.15% due 8/01/2015 7,000
Maricopa County, Arizona, School District, TAN:
1,000 No. 08 (Osborn), Series A, 4.40% due 6/30/1998 1,004
3,000 No. 40 (Glendale), Series B, 4.80% due 6/30/1998 3,020
2,000 No. 66 (Roosevelt Elementary), Series B, 4.80% due 6/30/1998 2,013
4,000 Maricopa County, Arizona, Unified High School District, No. 210 (Phoenix Project
of 1995), UT, Series B, 8% due 7/01/1998 4,119
Maricopa County, Arizona, Unified School District, TAN, Series A:
5,000 No. 11 (Peoria), 4.40% due 6/30/1998 5,019
1,000 No. 93 (Cave Creek), UT, 4.40% due 6/30/1998 1,004
2,500 No. 97 (Deer Valley), 4.40% due 6/30/1998 2,509
Mohave County, Arizona, IDA, IDR (Citizens Utilities Co. Project), CP, AMT:
1,000 3.90% due 10/14/1997 1,000
4,000 3.95% due 10/14/1997 4,000
5,400 3.80% due 10/17/1997 5,400
2,090 Mohave County, Arizona, IDA, IDR (Citizens Utilities Co. Project), VRDN, AMT,
4.20% due 5/01/2032 (a) 2,090
4,120 Navajo County, Arizona, IDA, IDR (Citizens Utilites Co. Project), VRDN, AMT,
4.20% due 5/01/2032 (a) 4,120
7,000 Phoenix, Arizona, Civic Improvement Corporation, Wastewater System Lease
Revenue Bonds, VRDN, 3.95% due 7/01/2003 (a) 7,000
Phoenix, Arizona, IDA, IDR, VRDN, AMT (a):
4,690 (Laich Industries Corp. Project), 4.25% due 9/01/2016 4,690
1,500 Refunding (V.A.W. of America, Inc.), 4.30% due 2/01/2012 1,500
Phoenix, Arizona, IDA, M/F Housing Revenue Bonds, VRDN (a):
8,420 (Mariners Poinnte Apartments Project), AMT, Series A, 4.25% due 10/01/2023 8,420
4,000 Refunding (Paradise Lakes Apartments Project), 4.20% due 7/01/2025 4,000
7,770 (Sunset Ranch), COP, 4.15% due 12/01/2027 7,770
200 Phoenix, Arizona, VRDN, UT, Series 95-2, 3.85% due 6/01/2020 (a) 200
Pima County, Arizona, IDA, Industrial Revenue Refunding Bonds, VRDN (a):
1,000 (Brush Wellman Inc., Project), 4.25% due 12/15/2033 1,000
1,650 (Tucson Retirement Center), 3.80% due 1/01/2009 1,650
Pima County, Arizona, IDA, M/F Housing Revenue Bonds, VRDN (a):
1,000 (Quail Ridge Apartments), AMT, Series B, 4.15% due 9/01/2009 1,000
6,690 Refunding (Eastside Place Apartments), 4.15% due 5/01/2027 6,690
5,000 Refunding (La Colla Apartments Project), 4.20% due 12/01/2025 5,000
7,300 Pinal County, Arizona, IDA, Hospital Revenue Bonds (Casa Grande Regional
Medical Center), VRDN, 4.15% due 12/01/2022 (a) 7,300
2,380 Santa Cruz County, Arizona, IDA, IDR (Citizens Utilities), CP, 3.85% due 2/04/1998 2,380
3,100 Yavapai County, Arizona, IDA, IDR (Citizens Utilities), CP, AMT, 3.95% due
10/03/1997 3,100
1,600 Yavapai County, Arizona, IDA, IDR, Refunding (Kachina Pointe Project), VRDN,
3.80% due 1/01/2009 (a) 1,600
810 Yuma and La Paz Counties, Arizona, Community District, Revenue Refunding
Bonds (Arizona Western College), UT, 6.20% due 7/01/1998 (b) 824
500 Yuma, Arizona, IDA, IDR (Ardco Inc. Project), VRDN, 4.20% due 7/01/2003 (a) 500
3,625 Yuma, Arizona, IDA, M/F Housing Revenue Bonds (El Encanto Apartments),
VRDN, Series A, 3.90% due 11/01/2008 (a) 3,625
Puerto Rico -- 6,000 Puerto Rico, Electric Power Authority, Power Revenue Bonds, MSTR, VRDN,
4.6% Series SGA-43, 3.90% due 7/01/2022 (a)(c) 6,000
1,750 Puerto Rico Industrial, Medical and Environmental Pollution Control Facilities
Financing Authority Revenue Bonds (Key Pharmaceuticals), Series A, 3.75%
due 12/01/1997 1,750
Total Investments (Cost -- $160,919*) -- 96.4% 160,919
Other Assets Less Liabilities -- 3.6% 6,025
--------
Net Assets --100.0% $166,944
========
(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, 1997.
(b) AMBAC Insured.
(c) MBIA Insured.
(d) FGIC Insured.
* Cost for Federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
Portfolio Abbreviations for CMA Arizona Municipal Money Fund
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
CP Commercial Paper
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
MSTR Municipal Securities Trust Receipts
PCR Pollution Control Revenue Bonds
TAN Tax Anticipation Notes
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<TABLE>
<CAPTION>
CMA Arizona Municipal Money Fund
Statement of Assets and Liabilities as of September 30, 1997
<S> <C> <C>
Assets:
Investments, at value (identified cost -- $160,918,814) (Note 1a) $160,918,814
Cash 85,885
Receivables:
Securities sold $5,155,541
Interest 942,896 6,098,437
----------
Deferred organization expenses (Note 1d) 6,503
Prepaid registration fees and other assets (Note 1d) 11,811
------------
Total assets 167,121,450
------------
Liabilities:
Payables:
Investment adviser (Note 2) 76,324
Distributor (Note 2) 39,662 115,986
----------
Accrued expenses and other liabilities 61,311
------------
Total liabilities 177,297
------------
Net Assets $166,944,153
============
Net Assets Consist of:
Shares of beneficial interest, $0.10 par value, unlimited number of shares authorized $16,698,568
Paid-in capital in excess of par 150,287,047
Accumulated realized capital losses -- net (Note 4) (41,462)
------------
Net Assets -- Equivalent to $1.00 per share based on 166,985,680 shares of beneficial
interest outstanding $166,944,153
============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
CMA Arizona Municipal Money Fund
Statement of Operations for the Six Months Ended September 30, 1997
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium earned $3,268,888
Expenses:
Investment advisory fees (Note 2) $428,027
Distribution fees (Note 2) 104,152
Registration fees (Note 1d) 30,859
Professional fees 25,744
Accounting services (Note 2) 19,306
Transfer agent fees (Note 2) 12,102
Custodian fees 8,785
Printing and shareholder reports 4,874
Amortization of organization expenses (Note 1d) 3,321
Pricing fees 2,008
Trustees' fees and expenses 702
Other 1,374
---------
Total expenses 641,254
----------
Investment income -- net 2,627,634
Realized Loss on Investments -- Net (Note 1c) (5,209)
----------
Net Increase in Net Assets Resulting from Operations $2,622,425
==========
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
CMA Arizona Municipal Money Fund
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
Sept. 30, 1997 March 31, 1997
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Investment income -- net $2,627,634 $4,215,621
Realized loss on investments -- net (5,209) (29,558)
------------ ------------
Net increase in net assets resulting from operations 2,622,425 4,186,063
------------ ------------
Dividends to Shareholders (Note 1e):
Investment income -- net (2,627,634) (4,215,621)
------------ ------------
Net decrease in net assets resulting from dividends to shareholders (2,627,634) (4,215,621)
------------ ------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 435,403,435 811,252,304
Net asset value of shares issued to shareholders in reinvestment of dividends
(Note 1e) 2,627,646 4,215,615
------------ ------------
438,031,081 815,467,919
Cost of shares redeemed (440,632,656) (783,407,673)
------------ ------------
Net increase (decrease) in net assets derived from beneficial interest transactions (2,601,575) 32,060,246
------------ ------------
Net Assets:
Total increase (decrease) in net assets (2,606,784) 32,030,688
Beginning of period 169,550,937 137,520,249
------------ ------------
End of period $166,944,153 $169,550,937
============ ============
See Notes to Financial Statements.
</TABLE>
<TABLE>
<CAPTION>
CMA Arizona Municipal Money Fund
Financial Highlights
For the
Six
Months
The following per share data and ratios have been derived Ended
from information provided in the financial statements. Sept. 30, For the Year Ended March 31,
1997 1997 1996 1995 1994
Increase (Decrease) in Net Asset Value:
<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 .03 .02
-------- -------- -------- -------- -------
Total from investment operations .01 .03 .03 .03 .02
-------- -------- -------- -------- -------
Less dividends from investment income -- net (.01) (.03) (.03) (.03) (.02)
-------- -------- -------- -------- -------
Net asset value, end of period $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== =======
Total Investment Return 3.08%* 2.86% 3.35% 2.83% 1.90%
======== ======== ======== ======== =======
Ratios to Average Net Assets:
Expenses, net of reimbursement .75%* .76% .58% .54% .59%
======== ======== ======== ======== =======
Expenses .75%* .76% .77% .85% .98%
======== ======== ======== ======== =======
Investment income -- net 3.07%* 2.80% 3.27% 2.84% 1.89%
======== ======== ======== ======== =======
Supplemental Data:
Net assets, end of period (in thousands) $166,944 $169,551 $137,520 $103,717 $73,414
======== ======== ======== ======== =======
* Annualized.
See Notes to Financial Statements.
</TABLE>
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. 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 and back-up withholding 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"). 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.
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, 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, 1997, the Fund had a net capital loss carryforward of
approximately $36,000, of which $6,000 expires in 2004 and $30,000
expires in 2005. This amount will be available to offset like amounts
of any future taxable gains.
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
Steven T. Lewis -- Vice President
Darrin J. SanFillipo -- 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 351
Boston, MA 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 32246-6484
(800) 221-7210*
* For inquiries regarding your CMA account,
call (800) CMA-INFO [(800) 262-4636].