UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT
COMPANIES
Investment Company Act file number 811-5011
Name of Fund: CMA North Carolina Municipal Money Fund
CMA Multi-State Municipal Series Trust
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President,
CMA North Carolina Municipal Money Fund, 800 Scudders Mill Road,
Plainsboro, NJ, 08536. Mailing address: P.O. Box 9011, Princeton,
NJ, 08543-9011
Registrant's telephone number, including area code: (609) 282-2800
Date of fiscal year end: 03/31/03
Date of reporting period: 04/01/02 - 3/31/03
Item 1 - Attach shareholder report
(BULL LOGO)
Merrill Lynch Investment Managers
Annual Report
March 31, 2003
CMA North Carolina
Municipal Money Fund
www.mlim.ml.com
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. An
investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other Government agency.
Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the
Fund. Past performance results shown in this report should not be
considered a representation of future performance, which will
fluctuate. Statements and other information herein are as dated and
are subject to change.
CMA North Carolina Municipal Money Fund
of CMA Multi-State Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
Printed on post-consumer recycled paper
TO OUR SHAREHOLDERS:
For the year ended March 31, 2003, CMA North Carolina Municipal
Money Fund paid shareholders a net annualized yield of .76%.* As of
March 31, 2003, the Fund's 7-day yield was .53%.
Economic Environment
North Carolina's finances remained under pressure throughout the
year ended March 31, 2003. Consequently, in August 2002, Moody's
Investors Service downgraded the state's general obligation rating
from AAA to Aa1, citing continued structural imbalance, reliance on
non-recurring revenues and a weakening balance sheet. In the past
few years, the state endured a series of adverse events in the form
of costly legal judgements, rebuilding in the wake of floods and
hurricanes, and revenue loss resulting from the national economic
recession. Income trends were impacted by the weak economy. After
growing 8% in 2000, personal income growth fell to just over 3% in
2002.
During the past year, North Carolina increased its sales tax rate
and made other revenue adjustments intended to restore structural
balance to the current year's budget. In addition, the state has
been reacting to budget imbalance since fiscal 2001 and has always
taken timely action to balance its budget. Despite these measures,
North Carolina has continued to struggle with revenue shortfalls. As
a result, by fiscal year-end 2003, the state's Budget Stabilization
Fund is projected to have no remaining funds. In early spring,
Governor Mike Easly will present the fiscal 2004 budget. The state
again will be facing a sizeable budget gap because several of the
revenue enhancement measures approved in 2001 are expiring. In
addition, budget reserves have been depleted and other non-recurring
measures were utilized to balance fiscal 2003. In fiscal 2004, the
current estimated budget deficit ranged anywhere from $1.7 billion
to $2.0 billion or as much as 15% of the state's budget. The state
has not disclosed whether or not it is contemplating the
securitization of tobacco settlement revenues to help reduce its
budget deficit. The long-term prospects for the state continue to be
good as a result of its expanding and diversifying economy.
Moreover, although outstanding debt has grown during the past few
years, debt levels remain well below the national average.
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
Going forward, a wide spread surplus of labor is expected to put
little upward pressure on wages and restrict income growth until
late 2003. The state's exporters have felt the pinch of the global
economic slowdown during 2002 with exports in the second half of the
year falling by nearly 20% compared to a year ago, far worse than
the 6% decline experienced nationwide. State exports of computer and
electronic products were hit particularly hard, decreasing by more
than 15% over the same period. During the past decade, North
Carolina's population increased by 19.3%, reaching 8 million. This
population growth has been stronger than the nation as a whole as
well as for the region. Consequently, the state's housing market
remains generally well balanced as lower mortgage rates continue to
have a favorable impact on home sales and new construction. Looking
ahead, the housing sector is expected to stay strong as a slow
economic recovery keeps interest rates relatively low.
Investment Strategy
At the beginning of the 12-month period ended March 31, 2003, we
sought to maintain the Fund's relatively bearish stance. This was
because of our expectation of a rise in interest rates as reflected
by the Federal Reserve Board's change in bias from that of weakness
to neutral at the March 19, 2002 Federal Open Market Committee
meeting. In addition, this position allowed the Fund to take
advantage of the anticipated rise in yields on variable rate product
caused by outflows during tax time. As tax season began, a smaller
amount of income tax related redemptions caused variable rate
product to underperform compared to previously purchased fixed rate
securities. Consequently, although we allowed the Fund to trend to a
more bearish position, we continued to benefit from the more
aggressive stance attained early in the first quarter of 2002.
As the period progressed, economic data began to reveal that growth
for the second quarter of 2002 was slowing from that of the first
quarter. Furthermore, U.S. equity markets were suffering from a
confidence crisis caused by accounting scandals and corporate
malfeasance. For example, the Dow Jones Industrial Average, which
began the period at 10,362, declined to 7,992 by the end of March
2003. As a result of these factors, we looked to move to a more
neutral position given our opinion that the Federal Reserve Board
would not tighten monetary policy in the coming months. A majority
of our extension took place in April and May 2002 as we tried to
lock in higher yields than were expected going forward. This
strategy benefited the Fund as yields on tax-exempt securities
maturing in one year declined almost 70 basis points (.70%) by the
end of June 2002. As summer ended, continued weakness in capital
expenditures and another possible military confrontation with Iraq
caused the U.S. economy to weaken. In fact, at its August 13, 2002
Federal Open Market Committee meeting, the Federal Reserve Board
changed its outlook from neutral back to that of weakness.
As the second half of the period began, we looked to maintain the
Fund's current stance because it was our opinion that the
significant short-term issuance from the State of California would
cause general market variable rate product to outperform fixed rate
securities through year end. Our strategy benefited the Fund as
yields on variable rate product averaged 1.65%, while yields on
fixed rate product averaged 1.45% through mid-November.
Nevertheless, from mid-November 2002 to early March 2003, yields on
variable rate securities declined significantly because of the
tremendous demand for short-term tax-exempt instruments. This was
caused by both the Federal Reserve Board lowering the Federal Funds
rate by 50 basis points at the November 6, 2002 Federal Open Market
Committee meeting and continued cash inflows through February 2003.
Since we anticipated that the Federal Reserve Board would keep
monetary policy on hold for the near term, we continued to look for
attractive opportunities to moderately extend our average portfolio
maturity during this time. However, this proved to be difficult
given a flat short-term tax-exempt yield curve and lack of state-
specific fixed rate issuance. Our strategy allowed the Fund to
provide a total return that was above average relative to its peer
group for the one-year period ended March 31, 2003. As the period
ended, we planned to maintain our current position, given the
significant rally in the note market and the expected spike in
yields on variable rate product as tax time approaches.
In Conclusion
We thank you for your support of CMA North Carolina Municipal Money
Fund, and we look forward to serving your investment needs in the
months and years ahead.
Sincerely,
(Terry K. Glenn)
Terry K. Glenn
President and Trustee
(Kenneth A. Jacob)
Kenneth A. Jacob
Senior Vice President
(John M. Loffredo)
John M. Loffredo
Senior Vice President
(Darrin J. SanFillippo)
Darrin J. SanFillippo
Portfolio Manager
April 14, 2003
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2003 (IN THOUSANDS)
Face
State Amount Issue Value
North Carolina-- $ 1,800 Alamance County, North Carolina, Industrial Facilities and Pollution Control
91.9% Financing Authority, IDR (Millender Project), VRDN, AMT, 1.32% due
12/01/2020 (a) $ 1,800
3,100 Ashe County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, Industrial Revenue Bonds (Oldham Saw Inc. Project),
VRDN, AMT, 1.25% due 5/01/2014 (a) 3,100
2,400 Buncombe County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, Revenue Refunding Bonds (Industrial Development Alliance),
VRDN, AMT, 1.40% due 8/01/2009 (a) 2,400
6,600 Cabarrus County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, Industrial Revenue Bonds (S&D Coffee Inc. Project), VRDN,
AMT, 1.27% due 9/01/2011 (a) 6,600
2,615 Charlotte, North Carolina, GO, FLOATS, VRDN, Series 500, 1.21% due 5/01/2016 (a) 2,615
2,709 Chocowinity, North Carolina, BAN, 2.50% due 10/22/2003 2,729
4,095 Cleveland County, North Carolina, GO, Refunding, 2% due 6/01/2003 (c) 4,100
2,475 Columbus County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, Industrial Revenue Bonds (Kroy Building Products Inc.
Project), VRDN, AMT, 1.15% due 12/01/2025 (a) 2,475
6,500 Davidson County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, Industrial Revenue Bonds (Diebold Inc. Project), VRDN,
AMT, 1.15% due 6/01/2017 (a) 6,500
2,600 Durham County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR (Cormetech Inc. Project), VRDN, AMT, 1.32%
due 11/01/2011 (a) 2,600
1,797 East Moore, North Carolina, Water District, BAN, 2.25% due 5/14/2003 1,799
1,623 Faith Town, North Carolina, GO, BAN, 2% due 9/10/2003 1,629
2,000 Gaston County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR (Marlatex Corporation Project), VRDN, AMT, 1.37%
due 6/01/2015 (a) 2,000
1,070 Greensboro, North Carolina, GO, Refunding, 2.25% due 5/01/2003 1,071
Greensboro, North Carolina, Public Improvement, GO, VRDN, Series B (a):
3,335 1.15% due 2/01/2022 3,335
1,330 1.15% due 2/01/2023 1,330
200 Guilford County, North Carolina, GO, VRDN, Series C, 1.15% due 10/01/2017 (a) 200
Guilford County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR, VRDN, AMT (a):
3,800 (Nat Sherman Building LLC), 1.32% due 3/01/2022 3,800
1,200 (Neal Manufacturing), 1.25% due 11/01/2013 1,200
2,200 (Ornamental Products), 1.25% due 12/01/2014 2,200
600 (Pharmagraphics Inc. Project), 1.40% due 9/01/2010 600
2,600 (Snider Tire Inc.), 1.32% due 10/01/2019 2,600
24,815 Halifax County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds, Exempt Facilities (Westmoreland),
VRDN, 1.25% due 12/01/2019 (a) 24,815
1,600 Harnett County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR (Edwards Brothers Inc. Project), VRDN, AMT, 1.32%
due 1/01/2007 (a) 1,600
6,000 Hertford County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR (Easco Corporation Project), VRDN, AMT, 1.30%
due 11/01/2013 (a) 6,000
Portfolio Abbreviations for CMA North Carolina Municipal Money Fund
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
COP Certificates of Participation
CP Commercial Paper
FLOATS Floating Rate Securities
GO General Obligation Bonds
IDR Industrial Development Revenue Bonds
MERLOTS Municipal Extendible Receipt Liquidity
Option Tender Securities
PCR Pollution Control Revenue Bonds
PUTTERS Puttable Tax Exempt Receipts
ROCS Reset Option Certificates
TRAN Tax Revenue Anticipation Notes
VRDN Variable Rate Demand Notes
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2003 (CONTINUED) (IN THOUSANDS)
Face
State Amount Issue Value
North Carolina $ 325 Holly Ridge, North Carolina, GO, BAN, 2.50% due 1/28/2004 $ 328
(continued) 3,700 Indian Beach, North Carolina, GO, BAN, 2.25% due 5/14/2003 3,704
2,500 Iredell County, North Carolina, Public Facilities Corporation, Installment
Payment Revenue Refunding Bonds (Iredell County School Project), VRDN, 1.15%
due 6/01/2020 (a)(b) 2,500
2,500 Johnston County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (Hamlin Sheet Metal Co. Inc.), VRDN,
AMT, 1.25% due 11/01/2017 (a) 2,500
2,760 Lincoln County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR (Packaging NC Project), VRDN, 1.29% due
10/01/2013 (a) 2,760
9,000 Martin County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR (Penco Products Project), VRDN, AMT, 1.30% due
9/01/2022 (a) 9,000
5,700 Mecklenburg County, North Carolina, COP, VRDN, 1.15% due 4/01/2020 (a) 5,700
Mecklenburg County, North Carolina, GO, VRDN (a):
2,000 Series B, 1.15% due 2/01/2022 2,000
5,100 Series E, 1.15% due 4/01/2017 5,100
Mecklenburg County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, Industrial Revenue Bonds, VRDN, AMT (a):
900 (Ferguson Supply and Box Manufacturing), 1.25% due 8/01/2010 900
1,500 (Griffith Micro Science Project), 1.25% due 11/01/2007 1,500
5,700 (Rexroth Corp. Project), 1.27% due 9/01/2016 5,700
6,100 (Southern Steel Company, LLC Project), 1.27% due 3/02/2015 6,100
3,500 Mecklenburg County, North Carolina, Public Improvement, GO, Series B,
3.25% due 2/01/2004 3,563
14,115 Municipal Securities Trust Certificates, GO, VRDN, Series 138, Class A,
1.23% due 3/16/2015 (a) 14,115
3,400 North Carolina Agriculture Finance Authority, Agriculture Development
Revenue Bonds (Albemarle Cotton Growers), VRDN, AMT, 1.32% due 7/01/2014 (a) 3,400
9,210 North Carolina Agriculture Finance Authority, Agriculture Development
Revenue Refunding Bonds (Harvey Fertilizer and Gas Project), VRDN, AMT,
1.32% due 6/01/2016 (a) 9,210
North Carolina Capital Facilities Finance Agency, Educational Facilities
Revenue Bonds, VRDN (a):
3,500 (Barton College), 1.15% due 2/01/2013 3,500
655 (Canterbury School Project), 1.15% due 8/01/2022 655
17,700 North Carolina Eastern Municipal Power Agency, Power System Revenue
Bonds, MERLOTS, VRDN, Series A22, 1.26% due 1/01/2024 (a)(d) 17,700
1,000 North Carolina Eastern Municipal Power Agency, Power System Revenue
Refunding Bonds, Series A, 5.50% due 1/01/2004 (d) 1,033
50 North Carolina Medical Care Commission, Health Care Facilities, First
Mortgage Revenue Refunding Bonds (Carol Woods Project), VRDN, 1.20%
due 4/01/2031 (a)(e) 50
8,235 North Carolina Medical Care Commission, Health Care Facilities Revenue
Bonds (Cabarrus Memorial Hospital Project), VRDN, AMT, 1.22% due
3/01/2028 (a) 8,235
3,855 North Carolina Medical Care Commission, Retirement Facilities Revenue
Refunding Bonds (Aldersgate Project), VRDN, 1.25% due 1/01/2031 (a) 3,855
North Carolina Municipal Power Agency Number 1, Catawba Electric
Revenue Bonds, VRDN (a):
6,815 PUTTERS, Series 341, 1.21% due 1/01/2015 (b) 6,815
4,335 ROCS, Series II R-211, 1.23% due 1/01/2020 (d) 4,335
5,500 North Carolina, State, GO, VRDN, MERLOTS, Series A23, 1.25% due
3/01/2027 (a) 5,500
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2003 (CONCLUDED) (IN THOUSANDS)
Face
State Amount Issue Value
North Carolina $ 1,010 Piedmont Triad Airport Authority, North Carolina, Special Facility Revenue
(concluded) Bonds (Cessna Aircraft Company Project), VRDN, 1.25% due 10/01/2012 (a) $ 1,010
8,000 Pine Knoll Shores, North Carolina, GO, BAN, 2.25% due 5/14/2003 8,008
6,555 Robeson County, North Carolina, GO, BAN, 2.75% due 10/22/2003 6,615
2,300 Rowan County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, PCR, IDR (Hon Industries Project), VRDN, AMT,
1.32% due 4/01/2018 (a) 2,300
2,300 Rutherford County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR (All American Homes of North Carolina), VRDN, AMT,
1.40% due 11/01/2011 (a) 2,300
2,520 Sampson County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR (Dubose Strapping Inc. Project), VRDN, AMT, 1.37%
due 1/01/2012 (a) 2,520
5,194 Scotland County, North Carolina, Water District II, GO, BAN, 1.75% due
8/13/2003 5,206
3,400 Stanley County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR (Patrick Industries Project), VRDN, AMT, 1.40%
due 8/01/2010 (a) 3,400
1,425 Union County, North Carolina, GO, Refunding, 4.75% due 5/01/2003 (d) 1,429
7,500 University of North Carolina (University of North Carolina, Chapel Hill and
North Carolina State), CP, 1% due 9/16/2003 7,500
3,300 Vance County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR (HH Hunt Manufacturing Facilities LLC Project),
VRDN, 1.32% due 6/01/2015 (a) 3,300
2,200 Wilson County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority, IDR (Supreme/Murphy Truck Project), VRDN, AMT,
1.40% due 6/01/2015 (a) 2,200
Puerto Rico-- 14,500 Puerto Rico Commonwealth TRAN, 2.50% due 7/30/2003 14,548
6.1% 3,000 Puerto Rico Public Buildings Authority Revenue Refunding Bonds, FLOATS,
VRDN, Series 787, 1.20% due 7/01/2036 (a) 3,000
Total Investments (Cost--$282,192*)--98.0% 282,192
Other Assets Less Liabilities--2.0% 5,887
---------
Net Assets--100.0% $ 288,079
=========
(a)The interest rate is subject to change periodically based upon
prevailing market rates.
The interest rate shown is the rate in effect at March 31, 2003.
(b)AMBAC Insured.
(c)FSA Insured.
(d)MBIA Insured.
(e)Radian Insured.
*Cost for Federal income tax purposes.
See Notes to Financial Statements.
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 31, 2003
Assets:
Investments, at value (identified cost--$282,191,822) $ 282,191,822
Cash 73,246
Receivables:
Securities sold $ 7,500,710
Interest 803,539 8,304,249
---------------
Prepaid registration fees and other assets 1,517,393
---------------
Total assets 292,086,710
---------------
Liabilities:
Payables:
Securities purchased 3,804,028
Investment adviser 123,751
Distributor 52,339 3,980,118
---------------
Accrued expenses and other liabilities 27,684
---------------
Total liabilities 4,007,802
---------------
Net Assets $ 288,078,908
===============
Net Assets Consist of:
Shares of beneficial interest, $.10 par value, unlimited number of shares authorized $ 28,812,790
Paid-in capital in excess of par 259,299,741
Accumulated realized capital losses--net (33,623)
---------------
Net Assets--Equivalent to $1.00 per share based on 288,127,896 shares of
beneficial interest outstanding $ 288,078,908
===============
See Notes to Financial Statements.
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2003
Investment Income:
Interest and amortization of premium earned $ 4,741,848
Expenses:
Investment advisory fees $ 1,616,597
Distribution fees 403,503
Accounting services 77,898
Transfer agent fees 39,455
Professional fees 39,120
Registration fees 19,599
Printing and shareholder reports 17,943
Custodian fees 13,708
Pricing fees 7,634
Trustees' fees and expenses 3,174
Other 15,293
---------------
Total expenses 2,253,924
---------------
Investment income--net 2,487,924
Realized Gain on Investments--Net 17,465
---------------
Net Increase in Net Assets Resulting from Operations $ 2,505,389
===============
See Notes to Financial Statements.
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
STATEMENTS OF CHANGES IN NET ASSETS
For the Year Ended March 31,
Increase (Decrease) in Net Assets: 2003 2002
Operations:
Investment income--net $ 2,487,924 $ 5,398,800
Realized gain on investments--net 17,465 --
--------------- ---------------
Net increase in net assets resulting from operations 2,505,389 5,398,800
--------------- ---------------
Dividends to Shareholders:
Dividends to shareholders from investment income--net (2,487,924) (5,398,800)
--------------- ---------------
Beneficial Interest Transactions:
Net proceeds from sale of shares 677,991,496 799,348,419
Value of shares issued to shareholders in reinvestment of dividends 2,487,778 5,398,777
--------------- ---------------
680,479,274 804,747,196
Cost of shares redeemed (758,614,308) (769,109,242)
--------------- ---------------
Net increase (decrease) in net assets derived from beneficial
interest transactions (78,135,034) 35,637,954
--------------- ---------------
Net Assets:
Total increase (decrease) in net assets (78,117,569) 35,637,954
Beginning of year 366,196,477 330,558,523
--------------- ---------------
End of year $ 288,078,908 $ 366,196,477
=============== ===============
See Notes to Financial Statements.
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
FINANCIAL HIGHLIGHTS
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended March 31,
Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000 1999
Per Share Operating Performance:
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Investment income--net .01 .02 .03 .03 .03
Realized gain (loss) on investments--net --++ -- -- --++ --++
---------- ---------- ---------- ---------- ----------
Total from investment operations .01 .02 .03 .03 .03
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.01) (.02) (.03) (.03) (.03)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment Return .76% 1.63% 3.42% 2.76% 2.73%
========== ========== ========== ========== ==========
Ratios to Average Net Assets:
Expenses .70% .71% .71% .71% .71%
========== ========== ========== ========== ==========
Investment income--net .77% 1.62% 3.36% 2.72% 2.69%
========== ========== ========== ========== ==========
Supplemental Data:
Net assets, end of year (in thousands) $ 288,079 $ 366,196 $ 330,559 $ 291,536 $ 304,066
========== ========== ========== ========== ==========
++Amount is less than $.01 per share.
See Notes to Financial Statements.
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
CMA North Carolina Municipal Money Fund (the "Fund") is part of CMA
Multi-State Municipal Series Trust (the "Trust"). The Fund is
registered under the Investment Company Act of 1940 as a non-
diversified, open-end management investment company. The Fund's
financial statements are prepared in conformity with accounting
principles generally accepted in the United States of America, which
may require the use of management accruals and estimates. 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 demand notice payment period. In the case of a floating rate
instrument, the remaining maturity is the next coupon date on which
the interest rate is to be adjusted.
(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). Realized gains and losses on security
transactions are determined on the identified cost basis. Interest
income (including amortization of premium and discount) is
recognized on the accrual basis.
(d) Prepaid registration fees--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.
(f) Expenses--Certain expenses have been allocated to the individual
Funds in the Trust on a pro rata basis based upon the respective
aggregate net asset value of each Fund included in the Trust.
(g) Reclassification--Accounting principles generally accepted in
the United States of America require that certain components of net
assets be adjusted to reflect permanent differences between
financial and tax reporting. Accordingly, the current year's
permanent book/tax difference of $10,344 has been reclassified
between paid-in capital in excess of par and accumulated net
realized losses. This reclassification has no effect on net assets
or net asset value 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.
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
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: .50%
of the first $500 million of average daily net assets; .425% of
average daily net assets in excess of $500 million but not exceeding
$1 billion; and .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 Incorporated ("MLPF&S")
receives a distribution fee from the Fund at the end of each month
at the annual rate of .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.
For the year ended March 31, 2003, the Fund reimbursed FAM $6,841
for certain accounting services.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, PSI, FDS, and/or ML & Co.
3. Shares of Beneficial Interest:
The number of shares sold, reinvested and redeemed during the
periods corresponds to the amounts included in the Statements of
Changes in Net Assets for net proceeds from sale of shares, value of
shares reinvested and cost of shares redeemed, respectively, since
shares are recorded at $1.00 per share.
4. Distributions to Shareholders:
The tax character of distributions paid during the fiscal years
ended March 31, 2003 and March 31, 2002 was as follows:
3/31/2003 3/31/2002
Distributions paid from:
Tax-exempt income $ 2,487,924 $ 5,398,800
------------ ------------
Total distributions $ 2,487,924 $ 5,398,800
============ ============
As of March 31, 2003, there were no significant differences between
the book and tax components of net assets.
5. Capital Loss Carryforward:
At March 31, 2003, the Fund had a net capital loss carryforward of
approximately $33,623 of which $6,425 expires in 2005; $26,651
expires in 2007 and $547 expires in 2008. This amount will be
available to offset like amounts of any future taxable gains.
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees
of CMA North Carolina Municipal Money Fund
of CMA Multi-State Municipal Series Trust:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of CMA North
Carolina Municipal Money Fund as of March 31, 2003, and the related
statement of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then
ended, and the financial highlights for each of the five years in
the period then ended. These financial statements and financial
highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. 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 as of March 31, 2003, by
correspondence with the custodian and brokers; where replies were
not received from brokers, we performed other auditing procedures.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of CMA North Carolina Municipal Money Fund as of
March 31, 2003, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in
the period then ended, and its financial highlights for each of the
five years in the period then ended, in conformity with accounting
principles generally accepted in the United States of America.
Deloitte & Touche LLP
Princeton, New Jersey
May 8, 2003
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
IMPORTANT TAX INFORMATION (UNAUDITED)
All of the net investment income distributions paid by CMA North
Carolina Municipal Money Fund of CMA Multi-State Municipal Series
Trust during the taxable year ended March 31, 2003 qualify as tax-
exempt interest dividends for Federal income tax purposes.
Please retain this information for your records.
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
OFFICERS AND TRUSTEES
Number of
Portfolios Other
in Fund Director-
Position(s) Length Complex ships
Held of Time Overseen by Held by
Name, Address & Age with Fund Served Principal Occupation(s) During Past 5 Years Trustee Trustee
Interested Trustee
Terry K. Glenn* President 1999 to President and Chairman of Merrill Lynch 118 Funds None
P.O. Box 9011 and present Investment Managers, L.P. ("MLIM")/Fund 162 Portfolios
Princeton, Trustee and Asset Management, L.P. ("FAM")-Advised
NJ 08543-9011 1988 to Funds since 1999; Chairman (Americas
Age: 62 present Region) of MLIM from 2000 to 2002;
Executive Vice President of MLIM and
FAM (which terms as used herein include
their corporate predecessors) from 1983
to 2002; President of FAM Distributors. Inc.
("FAMD") from 1986 to 2002 and Director
thereof from 1991 to 2002; Executive Vice
President and Director of Princeton Services,
Inc. ("Princeton Services") from 1993 to 2002;
President of Princeton Administrators, L.P.
from 1989 to 2002; Director of Financial Data
Services, Inc. from 1985 to 2002.
*Mr. Glenn is a director, trustee or member of an advisory board of
certain other investment companies for which FAM or MLIM acts as
investment adviser. Mr. Glenn is an "interested person," as
described in the Investment Company Act, of the Fund based on his
former positions with FAM, MLIM, FAMD, Princeton Services and
Princeton Administrators, L.P. The Trustee's term is unlimited.
Trustees serve until their resignation, removal or death, or until
December 31 of the year in which they turn 72. As Fund President,
Mr. Glenn serves at the pleasure of the Board of Trustees.
Number of
Portfolios Other
in Fund Director-
Position(s) Length Complex ships
Held of Time Overseen by Held by
Name, Address & Age with Fund Served* Principal Occupation(s) During Past 5 Years Trustee Trustee
Independent Trustees
Ronald W. Forbes Trustee 1988 to Professor Emeritus of Finance, School of 45 Funds None
P.O. Box 9095 present Business, State University of New York at 51 Portfolios
Princeton, Albany since 2000 and Professor thereof
NJ 08543-9095 from 1989 to 2000; International Consultant,
Age: 62 Urban Institute from 1995 to 1999.
Cynthia A. Montgomery Trustee 1994 to Professor, Harvard Business School since 45 Funds Unum
P.O. Box 9095 present 1989. Director, Unum Provident Corporation 51 Portfolios Provident
Princeton, since 1990; Director, Newell Rubbermaid, Inc. Corporation;
NJ 08543-9095 since 1995. Newell
Age: 50 Rubbermaid,
Inc.
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
OFFICERS AND TRUSTEES (CONTINUED)
Number of
Portfolios Other
in Fund Director-
Position(s) Length Complex ships
Held of Time Overseen by Held by
Name, Address & Age with Fund Served* Principal Occupation(s) During Past 5 Years Trustee Trustee
Independent Trustees (concluded)
Charles C. Reilly Trustee 1990 to Self-employed financial consultant since 45 Funds None
P.O. Box 9095 present 1990. 51 Portfolios
Princeton,
NJ 08543-9095
Age: 71
Kevin A. Ryan Trustee 1992 to Founder and Director Emeritus of The Boston 45 Funds None
P.O. Box 9095 present University Center for the Advancement of 51 Portfolios
Princeton, Ethics and Character; Professor of
NJ 08543-9095 Education at Boston University from 1982
Age: 70 to 1999 and Professor Emeritus since 1999.
Roscoe S. Suddarth Trustee 2000 to President, Middle East Institute from 1995 45 Funds None
P.O. Box 9095 present to 2001; Foreign Service Officer, United 51 Portfolios
Princeton, States Foreign Service from 1961 to 1995;
NJ 08543-9095 Career Minister from 1989 to 1995; Deputy
Age: 67 Inspector General, U.S. Department of State
from 1991 to 1994; U.S. Ambassador to the
Hashemite Kingdom of Jordan from 1987 to 1990.
Richard R. West Trustee 1988 to Dean Emeritus of New York University, 45 Funds Bowne & Co.,
P.O. Box 9095 present Leonard N. Stern School of Business 51 Portfolios Inc.; Vornado
Princeton, Administration since 1994. Operating
NJ 08543-9095 Company;
Age: 65 Vornado
Realty Trust;
Alexander's,
Inc.
Edward D. Zinbarg Trustee 2000 to Self-employed financial consultant since 45 Funds None
P.O. Box 9095 present 1994. 51 Portfolios
Princeton,
NJ 08543-9095
Age: 68
*The Trustee's term is unlimited. Trustees serve until their
resignation, removal or death, or until December 31 of the year in
which they turn 72.
CMA NORTH CAROLINA MUNICIPAL MONEY FUND
OFFICERS AND TRUSTEES (CONCLUDED)
Position(s) Length
Held of Time
Name, Address & Age with Fund Served* Principal Occupation(s) During Past 5 Years
Fund Officers
Donald C. Burke Vice 1993 to First Vice President of MLIM and FAM since 1997 and Treasurer thereof
P.O. Box 9011 President present since 1999; Senior Vice President and Treasurer of Princeton Services
Princeton, and and since 1999; Vice President of FAMD since 1999; Director of MLIM Taxation
NJ 08543-9011 Treasurer 1999 to since 1990.
Age: 42 present
Kenneth A. Jacob Senior 2002 to Managing Director of MLIM since 2000; Director (Tax-Exempt Fixed Income)
P.O. Box 9011 Vice present of MLIM from 1997 to 2000.
Princeton, President
NJ 08543-9011
Age: 51
John M. Loffredo Senior 2002 to Managing Director of MLIM since 2000; Director (Tax-Exempt Fixed Income)
P.O. Box 9011 Vice present of MLIM from 1998 to 2000.
Princeton, President
NJ 08543-9011
Age: 39
Phillip S. Gillespie Secretary 2000 to First Vice President of MLIM since 2001; Director (Legal Advisory) of MLIM
P.O. Box 9011 present from 2000 to 2001; Vice President of MLIM from 1999 to 2000; Attorney
Princeton, associated with MLIM since 1998; Assistant General Counsel of Chancellor
NJ 08543-9011 LGT Asset Management, Inc. from 1997 to 1998.
Age: 39
*Officers of the Fund serve at the pleasure of the Board of
Trustees.
Further information about the Fund's Officers and Trustees is
available in the Fund's Statement of Additional Information, which
can be obtained without charge by calling 1-800-MER-FUND.
Custodian
State Street Bank and Trust Company
P.O. Box 351
Boston, MA 02101
Transfer Agent
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
or 800-262-4636.
Item 2 - Did registrant adopt a code of ethics, as of the end of the
period covered by this report, that applies to the registrant's
principal executive officer, principal financial officer, principal
accounting officer or controller, or persons performing similar
functions, regardless of whether these individuals are employed by
the registrant or a third party? If not, why not? Briefly describe
any amendments or waivers that occurred during the period. State
here if code of ethics/amendments/waivers are on website and give
website address-. State here if fund will send code of ethics to
shareholders without charge upon request--N/A (not answered until
July 15, 2003 and only annually for funds)
Item 3 - Did the registrant's board of directors determine that the
registrant either: (i) has at least one audit committee financial
expert serving on its audit committee; or (ii) does not have an
audit committee financial expert serving on its audit committee? If
yes, disclose name of financial expert and whether he/she is
"independent," (fund may, but is not required, to disclose
name/independence of more than one financial expert) If no, explain
why not. -N/A (not answered until July 15, 2003 and only annually
for funds)
Item 4 - Disclose annually only (not answered until December 15,
2003)
(a) Audit Fees - Disclose aggregate fees billed for each of the last
two fiscal years for professional services rendered by the principal
accountant for the audit of the registrant's annual financial
statements or services that are normally provided by the accountant
in connection with statutory and regulatory filings or engagements
for those fiscal years. N/A.
(b) Audit-Related Fees - Disclose aggregate fees billed in each of
the last two fiscal years for assurance and related services by the
principal accountant that are reasonably related to the performance
of the audit of the registrant's financial statements and are not
reported under paragraph (a) of this Item. Registrants shall
describe the nature of the services comprising the fees disclosed
under this category. N/A.
(c) Tax Fees - Disclose aggregate fees billed in each of the last
two fiscal years for professional services rendered by the principal
accountant for tax compliance, tax advice, and tax planning.
Registrants shall describe the nature of the services comprising the
fees disclosed under this category. N/A.
(d) All Other Fees - Disclose aggregate fees billed in each of the
last two fiscal years for products and services provided by the
principal accountant, other than the services reported in paragraphs
(a) through (c) of this Item. Registrants shall describe the nature
of the services comprising the fees disclosed under this category.
N/A.
(e)(1) Disclose the audit committee's pre-approval policies and
procedures described in paragraph (c)(7) of Rule 2-01 of Regulation
S-X. N/A.
(e)(2) Disclose the percentage of services described in each of
paragraphs (b) through (d) of this Item that were approved by the
audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X. N/A.
(f) If greater than 50%, disclose the percentage of hours expended
on the principal accountant's engagement to audit the registrant's
financial statements for the most recent fiscal year that were
attributed to work performed by persons other than the principal
accountant's full-time, permanent employees. N/A.
(g) Disclose the aggregate non-audit fees billed by the registrant's
accountant for services rendered to the registrant, and rendered to
the registrant's investment adviser (not including any sub-adviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the adviser
that provides ongoing services to the registrant for each of the
last two fiscal years of the registrant. N/A.
(h) Disclose whether the registrant's audit committee has considered
whether the provision of non-audit services that were rendered to
the registrant's investment adviser (not including any subadviser
whose role is primarily portfolio management and is subcontracted
with or overseen by another investment adviser), and any entity
controlling, controlled by, or under common control with the
investment adviser that provides ongoing services to the registrant
that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X is compatible with maintaining the principal
accountant's independence. N/A.
Item 5 - If the registrant is a listed issuer as defined in Rule 10A-
3 under the Exchange Act, state whether or not the registrant has a
separately-designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Exchange Act. If the
registrant has such a committee, however designated, identify each
committee member. If the entire board of directors is acting as the
registrant's audit committee in Section 3(a)(58)(B) of the Exchange
Act, so state.
If applicable, provide the disclosure required by Rule 10A-3(d)
under the Exchange Act regarding an exemption from the listing
standards for audit committees.
(Listed issuers must be in compliance with the new listing rules by
the earlier of their first annual shareholders meeting after January
2004, or October 31, 2004 (annual requirement))
Item 6 - Reserved
Item 7 - For closed-end funds that contain voting securities in
their portfolio, describe the policies and procedures that it uses
to determine how to vote proxies relating to those portfolio
securities. N/A (not answered until July 1, 2003)
Item 8--Reserved
Item 9(a) - Disclose the conclusions of the registrant's principal
executive officer or officers and principal financial officer or
officers, or persons performing similar functions, about the
effectiveness of the registrant's disclosure controls and procedures
(as defined in Rule 30a-2(c) under the Act (17 CFR 270.30a-2(c)))
based on their evaluation of these controls and procedures as of a
date within 90 days of the filing date of the report that includes
the disclosure required by this paragraph. N/A (not answered until
July 15, 2003 and only annually for funds)
Item 9(b)--There were no significant changes in the registrant's
internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Item 10 - Exhibits
10(a) - Attach code of ethics or amendments/waivers, unless code of
ethics or amendments/waivers is on website or offered to
shareholders upon request without charge. N/A.
10(b) - Attach certifications pursuant to Section 302 of the
Sarbanes-Oxley Act. Attached hereto.
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, the registrant has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CMA North Carolina Municipal Money Fund
By: _/s/ Terry K. Glenn_______
Terry K. Glenn,
President of
CMA North Carolina Municipal Money Fund
Date: May 21, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934
and the Investment Company Act of 1940, this report has been signed
below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.
By: _/s/ Terry K. Glenn________
Terry K. Glenn,
President of
CMA North Carolina Municipal Money Fund
Date: May 21, 2003
By: _/s/ Donald C. Burke________
Donald C. Burke,
Chief Financial Officer of
CMA North Carolina Municipal Money Fund
Date: May 21, 2003
Attached hereto as an exhibit are the certifications pursuant to
Section 906 of the Sarbanes-Oxley Act.