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 Arizona 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 Arizona
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
[LOGO] Merrill Lynch Investment Managers
Annual Report
March 31, 2003
CMA Arizona
Municipal Money Fund
www.mlim.ml.com
TO OUR SHAREHOLDERS:
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For the year ended March 31, 2003, CMA Arizona Municipal Money Fund paid
shareholders a net annualized yield of .77%.* As of March 31, 2003, the Fund's
7-day yield was .57%.
Economic Environment
Arizona's economy is improving at a slow but steady pace thanks to the state's
service and government sectors. Income growth has decelerated but is still above
the national average, helping sustain growth in personal service and retail
spending. Manufacturing remained the biggest drag on the state's economy during
the past year. For example, in September 2002, industrial production dipped and
the Arizona Business Index fell below 50 for the first time since December 2001.
Currently, one of the biggest positives for Arizona is its concentration in
defense-related companies. This should continue to benefit the state with
ongoing domestic and international security-related concerns. Arizona is home to
five major military bases that provide 50,000 jobs and have a $6 billion
economic impact on the state. Arizona should also benefit from a recent bill
passed by Congress that pushes pay hikes for all defense personnel and creates
new positions for border and airport security. Arizona's tourism industry has
remained weak with revenue per room down more than 9% for year-to-date August
2002. The area that was most adversely affected by the recession was the tourism
industry in northern Arizona. Anchored by the Grand Canyon, visitation was down
almost 40% compared to the same time last year and remained subdued all summer.
Population growth in Arizona continues to be very impressive. As of July 2002,
the state's population was over 5.4 million, up by 1.8 million or 49.3% from the
1990 census. This population increase, combined with low mortgage rates during
the past few years, has helped the state's housing market remain solid. Going
forward, resurging demand for semiconductors, coupled with increased demand for
defense-related manufacturing, should benefit Arizona's economy.
The state's financial operations have tightened considerably over the past year
with continued stress projected into fiscal year 2004. Arizona has been
experiencing the impact of the general economic slowdown on its revenues,
particularly sales and income tax collections. Additionally, the state's
high-technology sector has been contracting, resulting in declining income taxes
and job growth. As a result, faced with an approximately $1 billion budget
imbalance for fiscal year 2003, the state held two special sessions adjusting
the fiscal year 2003 budget by a total of almost $1.2 billion. In April 2002,
adjustments included $240 million in revenue bonds to replace pay-as-you-go
funding for school construction, $230 million in budget reductions and $191
million in funding deferral. In November 2002, adjustments for additional budget
reductions of $264 million were made, including $208 million on an ongoing
basis. For fiscal year 2004, the state's estimated budget deficit is projected
to be $1.2 billion or 15.8% of the state's budget. Strategies to reduce fiscal
year 2004's budget deficit include across-the-board cuts, reduction of local aid
and use of the state's rainy day fund. Consequently, the state's rainy day fund,
which totaled $400 million in 2000, stood at only $47 million as of June 30,
2002. The state has not yet made a decision whether to securitize tobacco
settlement revenues to help reduce their projected budget deficit in 2004.
Because of these factors, Standard & Poor's changed the outlook on Arizona's
credit rating from stable to negative in August.
Investment Strategy
At the beginning of the 12-month period ended March 31, 2003, we sought to
maintain the
* Based on a constant investment throughout the period, with dividends
compounded daily, and reflecting a net return to the investor after all
expenses.
1
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 that 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 tremendous demand for short-term tax-exempt
instruments. This was a result of the Federal Reserve Board's lowering of the
Federal Funds rate by 50 basis points at the November 6, 2002 Federal Open
Market Committee meeting and cash inflows that continued 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 according to iMoneyNet, Inc. As the period
ended, we planned to maintain our current position, given the significant rally
in the note market and the expected rise in yields on variable rate product as
tax time approaches.
2
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/ Terry K. Glenn
Terry K. Glenn
President and Trustee
/s/ Kenneth A. Jacob
Kenneth A. Jacob
Senior Vice President
/s/ John M. Loffredo
John M. Loffredo
Senior Vice President
/s/ Darrin J. SanFillippo
Darrin J. SanFillippo
Portfolio Manager
April 14, 2003
3
CMA ARIZONA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2003 (IN THOUSANDS)
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Face
State Amount Issue Value
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Arizona--84.3% Arizona Educational Loan Marketing Corporation, Educational Loan
Revenue Bonds, VRDN, AMT, Series A (a)(c):
$ 4,900 1.25% due 3/01/2015 ................................................................ $ 4,900
500 1.20% due 12/01/2020 ............................................................... 500
2,350 Arizona Health Facilities Authority, Hospital System Revenue Bonds (Northern
Arizona Healthcare), VRDN, Series B, 1.15% due 10/01/2026 (a)(c) ....................... 2,350
2,210 Arizona Health Facilities Authority Revenue Bonds (Arizona Volunteer Hospital
Federation), VRDN, Series A, 1.15% due 10/01/2015 (a)(d) ............................... 2,210
6,500 Arizona School District, TAN (Financing Program), COP, 2% due 7/31/2003 ................ 6,514
1,790 Arizona State Transportation Board, Excise Tax Revenue Refunding Bonds
(Maricopa County Regional Area Road), Series A, 5.60% due 7/01/2003 (f) ................ 1,810
2,500 Arizona State University, Revenue Refunding Bonds, VRDN, Series II-R-174,
1.23% due 7/01/2009 (a)(b) ............................................................. 2,500
2,390 Avondale, Arizona, IDA, IDR, Refunding (National Health Investors), VRDN,
1.20% due 12/01/2014 (a) ............................................................... 2,390
2,400 Casa Grande, Arizona, IDA, IDR (Price Companies Inc. Project), VRDN, AMT,
Series A, 1.25% due 12/01/2017 (a) ..................................................... 2,400
1,430 Chandler, Arizona, IDA, IDR (Red Rock Stamping Company Project), VRDN, AMT,
1.35% due 2/01/2020 (a) ................................................................ 1,430
2,500 City of Phoenix, Arizona, Civic Improvement, CP, Series 2003, 1.09% due 7/17/2003 ...... 2,500
4,500 Maricopa County, Arizona, Community College District, GO (Project of 1994),
Series D, 4% due 7/01/2003 ............................................................. 4,527
5,475 Maricopa County, Arizona, IDA, IDR (Trans-Matic Manufacturing Production
Project), VRDN, AMT, 1.24% due 10/01/2026 (a) .......................................... 5,475
Maricopa County, Arizona, IDA, M/F Housing Revenue Refunding Bonds, VRDN, AMT (a):
2,540 (Las Gardenias Apartments LP Project), Series A, 1.20% due 4/15/2033 ............... 2,540
4,800 (San Martin Apartments Project), Series A-1, 1.20% due 6/15/2035 ................... 4,800
4,000 (San Remo Apartments Project), 1.20% due 9/15/2035 ................................. 4,000
5,000 (Villas Solanas Apartments), Series A, 1.20% due 11/15/2032 ........................ 5,000
15,464 Maricopa County, Arizona, IDA, S/F Mortgage Revenue Bonds, FLOATS, VRDN,
AMT, Series 707, 1.28% due 12/01/2036 (a) .............................................. 15,465
3,000 Mesa, Arizona, GO, Refunding, 5% due 7/01/2003 (c) ..................................... 3,026
4,963 Phoenix, Arizona, Civic Improvement Corporation, Water System Revenue Bonds,
VRDN, FLOATS, Series 505, 1.21% due 7/01/2011 (a)(e) ................................... 4,963
Phoenix, Arizona, GO, Refunding, Series A:
4,000 3% due 7/01/2003 ................................................................... 4,013
1,000 5% due 7/01/2003 ................................................................... 1,008
1,990 Phoenix, Arizona, IDA, Government Office Lease Revenue Bonds (Capital Mall LLC
Project), 5% due 9/15/2003 (f) ......................................................... 2,026
Phoenix, Arizona, IDA, M/F Housing Revenue Bonds, VRDN (a):
1,000 (Bell Square Apartments Project), 1.25% due 6/01/2025 .............................. 1,000
8,420 (Mariners Pointe Apartments Project), AMT, Series A, 1.30% due 10/01/2023 .......... 8,420
Portfolio Abbreviations for CMA Arizona Municipal Money Fund
AMT Alternative Minimum Tax (subject to)
COP Certificates of Participation
CP Commercial Paper
FLOATS Floating Rate Securities
GO General Obligation Bonds
IDA Industrial Development Authority
IDR Industrial Development Revenue Bonds
M/F Multi-Family
MSTR Municipal Securities Trust Receipts
S/F Single-Family
TAN Tax Anticipation Notes
VRDN Variable Rate Demand Notes
4
CMA ARIZONA MUNICIPAL MONEY FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 2003 (CONCLUDED) (IN THOUSANDS)
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Face
State Amount Issue Value
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Arizona Phoenix, Arizona, IDA, M/F Housing Revenue Refunding Bonds, VRDN (a):
(concluded) $ 2,100 (Lynwood Apartments Project), 1.21% due 10/01/2025 .................................. $ 2,100
4,000 (Paradise Lakes Apartments Project), 1.25% due 7/01/2025 ............................ 4,000
Phoenix, Arizona, IDA, Revenue Bonds, VRDN, AMT (a):
1,435 (Laich Industries Corp. Project), 1.35% due 9/01/2016 ............................... 1,435
2,760 (Swift Aviation Services Inc. Project), 1.30% due 7/01/2024 ......................... 2,760
1,200 Phoenix, Arizona, IDA, Revenue Refunding Bonds (Valley of the Sun YMCA
Project), VRDN, 1.20% due 1/01/2031 (a) ................................................. 1,200
1,500 Pima County, Arizona, IDA, IDR, Refunding (Brush Wellman Inc. Project), VRDN,
1.20% due 9/01/2009 (a) ................................................................. 1,500
5,000 Pima County, Arizona, IDA, M/F Housing Revenue Refunding Bonds (La Cholla
Apartments Project), VRDN, 1.25% due 12/01/2025 (a) ..................................... 5,000
Pima County, Arizona, IDA, Revenue Bonds, VRDN (a):
4,770 (Lease Purchase), 1.30% due 6/01/2007 ............................................... 4,770
7,500 (Senior Living Facilities--La Posada), Series A, 1.15% due 5/01/2032 ................ 7,500
800 (Tohono Chul Ok Project), 1.15% due 8/01/2036 ....................................... 800
10,000 Salt River Project, Arizona, Agriculture Improvement and Power District, Electric
System Revenue Bond, CP, 1.03% due 5/01/2003 ............................................ 10,000
1,000 Salt River Project, Arizona, Agriculture Improvement and Power District,
Electric System Revenue Refunding Bonds (Salt River Project), Series A,
3% due 1/01/2004 ........................................................................ 1,014
4,400 Special Fund of Industrial Arizona, COP, CP, 1.65% due 4/02/2003 ........................ 4,400
8,500 Tempe, Arizona, Excise Tax Revenue Bonds (Tempe Center for the Arts Project),
VRDN, 1.15% due 7/01/2020 (a) ........................................................... 8,500
1,000 Tucson, Arizona, Airport Authority Inc., Special Revenue Bonds (LearJet Inc.),
VRDN, AMT, Series A, 1.30% due 10/01/2028 (a) ........................................... 1,000
2,365 Tucson, Arizona, IDA, IDR (Fluoresco Old Nogales Project), VRDN, AMT,
1.40% due 8/01/2025 (a) ................................................................. 2,365
3,825 Tucson, Arizona, IDA, Revenue Bonds (United Way Capital Corporation Project),
VRDN, 1.35% due 6/01/2021 (a) ........................................................... 3,825
2,900 University of Arizona, COP (Main Campus & Research), VRDN, Series A,
1.15% due 6/01/2025 (a)(f) .............................................................. 2,900
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Puerto Rico-- Government Development Bank of Puerto Rico, CP:
13.0% 5,000 1% due 4/10/2003 .................................................................... 5,000
4,500 1.08% due 6/19/2003 ................................................................. 4,500
6,500 Puerto Rico Electric Power Authority, Power Revenue Bonds, MSTR, VRDN,
Series SGA-43, 1.07% due 7/01/2022 (a) .................................................. 6,500
Puerto Rico Public Buildings Authority, Revenue Refunding Bonds, FLOATS (a):
5,912 Series 747D, 1.15% due 7/01/2017 .................................................... 5,912
3,000 Series 787, 1.20% due 7/01/2036 ..................................................... 3,000
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Total Investments (Cost--$185,748*)--97.3% .............................................. 185,748
Other Assets Less Liabilities--2.7% ..................................................... 5,064
--------
Net Assets--100.0% ...................................................................... $190,812
========
====================================================================================================================================
(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) FSA Insured.
(c) MBIA Insured.
(d) FGIC Insured.
(e) Prerefunded.
(f) AMBAC Insured.
* Cost for Federal income tax purposes.
See Notes to Financial Statements.
5
CMA ARIZONA MUNICIPAL MONEY FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 31, 2003
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Assets:
Investments, at value (identified cost--$185,748,354) ................................. $ 185,748,354
Cash .................................................................................. 76,852
Receivables:
Securities sold ..................................................................... $ 4,800,434
Interest ............................................................................ 505,052 5,305,486
-----------
Prepaid registration fees ............................................................. 7,456
-------------
Total assets .......................................................................... 191,138,148
-------------
Liabilities:
Payables:
Beneficial interest redeemed ........................................................ 199,355
Investment adviser .................................................................. 79,489
Distributor ......................................................................... 30,647 309,491
-----------
Accrued expenses and other liabilities ................................................ 16,161
-------------
Total liabilities ..................................................................... 325,652
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Net Assets ............................................................................ $ 190,812,496
=============
Net Assets Consist of:
Shares of beneficial interest, $.10 par value, unlimited number of
shares authorized ..................................................................... $ 19,089,563
Paid-in capital in excess of par ...................................................... 171,805,957
Undistributed investment income--net .................................................. $ 45
Accumulated realized capital losses--net .............................................. (83,069)
-----------
Total accumulated losses--net ......................................................... (83,024)
-------------
Net Assets--Equivalent to $1.00 per share based on 190,895,631 shares of
beneficial interest outstanding ....................................................... $ 190,812,496
=============
See Notes to Financial Statements.
6
CMA ARIZONA MUNICIPAL MONEY FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 2003
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Investment Income:
Interest and amortization of premium earned ...................................... $ 2,927,742
Expenses:
Investment advisory fees ......................................................... $ 976,054
Distribution fees ................................................................ 242,384
Accounting services .............................................................. 54,333
Professional fees ................................................................ 46,727
Registration fees ................................................................ 24,038
Transfer agent fees .............................................................. 20,057
Printing and shareholder reports ................................................. 17,261
Custodian fees ................................................................... 7,011
Pricing fees ..................................................................... 4,092
Trustees' fees and expenses ...................................................... 2,045
Other ............................................................................ 11,426
---------
Total expenses ................................................................... 1,405,428
------------
Investment income--net ........................................................... 1,522,314
------------
Net Increase in Net Assets Resulting from Operations ............................. $ 1,522,314
============
See Notes to Financial Statements.
7
CMA ARIZONA MUNICIPAL MONEY FUND
STATEMENTS OF CHANGES IN NET ASSETS
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For the Year Ended March 31,
-----------------------------------
Increase (Decrease) in Net Assets: 2003 2002
---------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income--net ............................................................... $ 1,522,314 $ 3,997,132
------------- -------------
Net increase in net assets resulting from operations ................................. 1,522,314 3,997,132
------------- -------------
Dividends to Shareholders:
Dividends to shareholders from investment income--net ................................ (1,522,314) (3,997,132)
------------- -------------
Beneficial Interest Transactions:
Net proceeds from sale of shares ..................................................... 864,504,814 865,895,417
Value of shares issued to shareholders in reinvestment of dividends .................. 1,522,387 3,987,370
------------- -------------
866,027,201 869,882,787
Cost of shares redeemed .............................................................. (902,922,723) (891,054,499)
------------- -------------
Net decrease in net assets derived from beneficial interest transactions ............. (36,895,522) (21,171,712)
------------- -------------
Net Assets:
Total decrease in net assets ......................................................... (36,895,522) (21,171,712)
Beginning of year .................................................................... 227,708,018 248,879,730
------------- -------------
End of year* ......................................................................... $ 190,812,496 $ 227,708,018
============= =============
* Undistributed investment income--net ................................................. $ 45 $ 45
============= =============
See Notes to Financial Statements.
8
CMA ARIZONA MUNICIPAL MONEY FUND
FINANCIAL HIGHLIGHTS
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The following per share data and ratios have been derived For the Year Ended March 31,
from information provided in the financial statements. -----------------------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2003 2002 2001 2000 1999
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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 ................................ .77% 1.68% 3.37% 2.80% 2.73%
========= ========= ========= ========= =========
Ratios to Average Net Assets:
Expenses ............................................... .72% .71% .74% .71% .73%
========= ========= ========= ========= =========
Investment income--net ................................. .78% 1.71% 3.31% 2.76% 2.69%
========= ========= ========= ========= =========
Supplemental Data:
Net assets, end of year (in thousands) ................. $ 190,812 $ 227,708 $ 248,880 $ 227,210 $ 214,018
========= ========= ========= ========= =========
+ Amount is less than $.01 per share.
See Notes to Financial Statements.
9
CMA ARIZONA MUNICIPAL MONEY FUND
NOTES TO FINANCIAL STATEMENTS
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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 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
backup 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.
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: .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 advisors and
10
CMA ARIZONA MUNICIPAL MONEY FUND
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
- --------------------------------------------------------------------------------
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 $4,214 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 ............................. $1,522,314 $3,997,132
---------- ----------
Total distributions .................... $1,522,314 $3,997,132
========== ==========
- --------------------------------------------------------------------------------
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
$83,069 of which $5,840 expires in 2004; $30,042 expires in 2005; $5,580 expires
in 2006; $5,514 expires in 2007; $10,340 expires in 2008 and $25,753 expires in
2009. This amount will be available to offset like amounts of any future taxable
gains.
11
CMA ARIZONA MUNICIPAL MONEY FUND
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
of CMA Arizona Municipal Money Fund of
CMA Multi-State Municipal Series Trust:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments, of CMA Arizona Municipal Money Fund 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 the 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. 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
Arizona 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 ARIZONA MUNICIPAL MONEY FUND
IMPORTANT TAX INFORMATION (UNAUDITED)
- --------------------------------------------------------------------------------
All of the net investment income distributions paid by CMA Arizona 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.
12
CMA ARIZONA 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 Asset 162 Portfolios
Princeton, NJ 08543-9011 Trustee and 1997 Management, L.P. ("FAM")--Advised Funds since
Age: 62 to present 1999; Chairman (Americas 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 1988 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 Albany 51 Portfolios
Princeton, NJ 08543-9095 since 2000 and Professor thereof from 1989 to
Age: 62 2000; International Consultant, 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, NJ 08543-9095 since 1990; Director, Newell Rubbermaid, Inc. Corporation;
Age: 50 since 1995. Newell
Rubbermaid,
Inc.
- ------------------------------------------------------------------------------------------------------------------------------------
Charles C. Reilly Trustee 1990 to Self-employed financial consultant since 1990. 45 Funds None
P.O. Box 9095 present 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 Ethics 51 Portfolios
Princeton, NJ 08543-9095 and Character; Professor of Education at Boston
Age: 70 University from 1982 to 1999 and Professor
Emeritus since 1999.
- ------------------------------------------------------------------------------------------------------------------------------------
13
CMA ARIZONA MUNICIPAL MONEY FUND
OFFICERS AND TRUSTEES (CONCLUDED)
- --------------------------------------------------------------------------------
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)
====================================================================================================================================
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 States 51 Portfolios
Princeton, NJ 08543-9095 Foreign Service from 1961 to 1995; Career
Age: 67 Minister from 1989 to 1995; Deputy 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, NJ 08543-9095 Administration since 1994. Operating
Age: 65 Company;
Vornado
Realty Trust;
Alexanders,
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.
- ------------------------------------------------------------------------------------------------------------------------------------
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 since
Princeton, NJ 08543-9011 and and 1999; Vice President of FAMD since 1999; Director of MLIM Taxation
Age: 42 Treasurer 1999 to since 1990.
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, NJ 08543-9011 President
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, NJ 08543-9011 President
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 and Attorney
Princeton, NJ 08543-9011 associated with MLIM since 1998; Assistant General Counsel of Chancellor LGT
Age: 39 Asset Management, Inc., from 1997 to 1998.
====================================================================================================================================
* 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.
14
CMA ARIZONA MUNICIPAL MONEY FUND
OFFICERS AND TRUSTEES
- --------------------------------------------------------------------------------
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 (800-262-4636).
15
[LOGO] Merrill Lynch Investment Managers
[GRAPHICS OMITTED]
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 Arizona Municipal Money Fund
of CMA Multi-State Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
[RECYCLED LOGO] Printed on post-consumer recycled paper #16714--3/03
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 Arizona Municipal Money Fund
By: /s/ Terry K. Glenn
--------------------------------
Terry K. Glenn,
President of
CMA Arizona 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 Arizona Municipal Money Fund
Date: May 21, 2003
By: /s/ Donald C. Burke
--------------------------------
Donald C. Burke,
Chief Financial Officer of
CMA Arizona Municipal Money Fund
Date: May 21, 2003
Attached hereto as an exhibit are the certifications pursuant to Section 906 of
the Sarbanes-Oxley Act.