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 of 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 of CMA Multi-State Municipal Series Trust, 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: 03/31/04
Date of reporting period: 04/01/03 - 09/30/03
Item 1 - Attach shareholder report
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
CMA Arizona
Municipal Money Fund
Semi-Annual Report
September 30, 2003
[LOGO] Merrill Lynch Investment Managers
CMA Arizona Municipal Money Fund
Officers and Trustees
Terry K. Glenn, President and Trustee
Ronald W. Forbes, Trustee
Cynthia A. Montgomery, Trustee
Charles C. Reilly, Trustee
Kevin A. Ryan, Trustee
Roscoe S. Suddarth, Trustee
Richard R. West, Trustee
Edward D. Zinbarg, Trustee
Kenneth A. Jacob, Senior Vice President
John M. Loffredo, Senior Vice President
Darrin J. SanFillippo, Vice President
Donald C. Burke, Vice President and Treasurer
Phillip S. Gillespie, Secretary
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).
2 CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003
A Letter From the President
Dear Shareholder
Now in its final quarter, 2003 has been a meaningful year in many respects.
After one of the most significant equity market downturns in many investors'
memories, this year finally brought hopeful signs for a sustainable economic
recovery. Sub par economic growth of 1.4% in the first quarter of 2003 increased
to projected growth of more than 4% in the second half of the year. With that
good news, fixed income investments, which had become the asset class of choice
during the long equity market decline, faced new challenges.
The Federal Reserve Board continued its accommodative monetary policy, lowering
the Federal Funds rate in June to 1%, its lowest level since 1958. With this
move, the short end of the yield curve remained relatively flat and it became
increasingly difficult to find attractive income opportunities. Through
September 30, 2003, both the Bond Market Association (BMA) Index and the
one-year Municipal Market Data (MMD) Index averaged 1.03% for the year. Rates on
the BMA Index, which measures the shortest end of the yield curve, averaged .85%
during the third quarter versus 1.16% in the second quarter. Rates on the
one-year MMD Index averaged .98% in the third quarter, just below the second
quarter average of 1%.
Against this backdrop, our portfolio managers continued to work diligently to
maximize tax-exempt returns consistent with the preservation of capital. With
that said, remember also that the advice and guidance of a skilled financial
advisor often can help you choose those investments that will best serve you as
you plan for your financial future.
Finally, I am proud to premiere a new look to our shareholder communications.
Our portfolio manager commentaries have been trimmed and organized in such a way
that you can get the information you need at a glance, in plain language.
Today's markets are confusing enough. We want to help you put it all in
perspective. The report's new size also allows us certain mailing efficiencies.
Any cost savings in production or postage are passed on to the Fund and,
ultimately, to Fund shareholders.
We thank you for trusting Merrill Lynch Investment Managers with your investment
assets, and we look forward to serving you in the months and years ahead.
Sincerely,
/s/ Terry K. Glenn
Terry K. Glenn
President and Trustee
CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003 3
[LOGO] Merrill Lynch Investment Managers
A Discussion With Your Fund's Portfolio Manager
With interest rates low and expected to remain that way for some time, we
looked increasingly to the higher yields offered by fixed rate notes during the
period.
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended September 30, 2003, CMA Arizona Municipal Money
Fund paid shareholders a net annualized yield of .38%.* As of September 30,
2003, the Fund's seven-day yield was .37%.
The Federal Reserve Board cut the Federal Funds rate once more during the
six-month period, sending interest rates to their lowest levels in almost 50
years. Despite indications that the economy was strengthening gradually, the
Federal Reserve Board emphasized its concern that deflation was a bigger threat
to the economy than inflation, and reassured investors that it planned to keep
short-term interest rates low until consistent growth in the economy and
employment was evident.
The expectation for a stable short-term interest rate environment created a
strong demand for fixed rate notes with maturities of six months - one year.
This caused yields on these notes to fall later in the period and somewhat
flattened the yield curve when compared to variable rate demand securities.
However, our aggressive pursuit of fixed rate notes earlier in the period
enabled us to lock in a favorable spread above variable rate securities. This
strategy enhanced the performance of the Fund during the six-month period.
Describe conditions in the State of Arizona during the period.
Arizona's economy performed well during the six-month period ended September 30,
2003. While the jobless rate remained high at around 6%, this was largely
because of robust labor force growth prompted by improving conditions. Defense
contracts continued to pour into the state, with Raytheon Company having
received more than $1 billion in new contracts in June alone. In fact, contracts
awarded to Arizona companies by the Department of Defense soared 40% in 2002 to
an all-time record of more than $6 billion. The state's high-technology sector
also started to pick up over the past few months as inventories declined and the
inventory-to-shipment ratios for computers and electronics declined to 1999
levels.
How did you manage the Fund during the period?
In the first half of the period, yields declined from already low levels as
investors worried about the potential for deflation and its impact on Federal
Reserve Board monetary policy. The falling yields happened to coincide with a
general lack of new issuance of Arizona short-term fixed rate securities. With
the demand for these investments very high, it became difficult to obtain new
supply in either the primary or secondary market. Taken together, these factors
hindered our ability to extend the Fund's average maturity as much as we would
have liked.
* Based on a constant investment throughout the period, with dividends
compounded daily, and reflecting a net return to the investor after all
expenses.
4 CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003
In early July, while new Arizona supply remained weak, the Fund received large
cash inflows equal to approximately 20% of assets. With yields near their lowest
point of the period, we were forced to lock in less attractive yields for a
60-day - 90-day period. Conditions improved somewhat in the second half of the
period when we saw an increase in municipal supply. During this time, we added
longer-term, higher-yielding fixed paper to the portfolio when prudent,
purchasing approximately $18.5 million of fixed notes with yields of 1% or more.
The ability to lock in these rates benefited Fund performance.
During most of the past six months, we looked to maintain a larger percentage of
fixed rate paper than our peers. Early in the period, however, we were careful
to keep enough of the Fund's assets in short-maturity holdings to handle
anticipated tax-time shareholder redemptions and to take advantage of the
expected spike in yields on these securities. During September, municipal
issuance picked up. This coincided with the end of the quarter, when brokers
typically offer variable paper at somewhat more attractive yields. As a result,
we increasingly took inflows of cash and made investments in this area.
How would you characterize the portfolio's position at the close of the period?
The Fund ended the period with an average portfolio maturity of 47 days, a day
shorter than the average of funds in its iMoneyNet, Inc. category. This compared
to an average life of 25 days at the beginning of the period, three days shorter
than the iMoneyNet group's 28-day average maturity. As of September 30, 2003,
the Fund had $176.6 million in net assets, down from $186.7 million at the start
of the period.
We continue to take a neutral approach to the Arizona short-term municipal
market, given our expectation that the Federal Reserve Board will leave interest
rates unchanged for the foreseeable future. In the months ahead, we will
continue to monitor developments in the national and Arizona economies,
maintaining our basic investment strategy while shifting the Fund's allocation
between fixed and variable rate notes in what we believe are the best interests
of our shareholders.
We also will keep a watchful eye on the Federal Reserve Board's monetary policy
and will be ready to respond with changes to our investment approach as needed.
Moreover, with a majority of fixed rate issuance behind us, we anticipate the
short-term tax-exempt yield curve will remain relatively flat for the near term.
Thus, unless the economy changes course and is weak enough to generate another
cut in the Federal Funds interest rate, we expect to purchase fewer fixed rate
securities than we did in the current period.
Darrin J. SanFillippo
Vice President and Portfolio Manager
October 9, 2003
CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003 5
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (in Thousands)
Face
State Amount Municipal Bonds Value
====================================================================================================================================
Arizona--87.4% $ 480 Apache County, Arizona, Ganado Unified School District No. 20, Impact Aid Revenue
Bonds, GO, Series A, 2% due 7/01/2004 (b) ......................................... $ 484
Arizona Educational Loan Marketing Corporation, Educational Loan Revenue Bonds,
VRDN, AMT, Series A (a)(c):
4,900 1.15% due 3/01/2015 (c) ..................................................... 4,900
500 1.15% due 12/01/2020 ........................................................ 500
100 Arizona Health Facilities Authority, Hospital System Revenue Bonds (Northern
Arizona Healthcare), Series B, VRDN, 1.10% due 10/01/2026 (a)(c) .................. 100
7,250 Arizona School District, TAN (Financing Program), COP, 1.75% due 7/30/2004 ........ 7,295
3,130 Arizona School Facilities Board, State School Improvement Revenue Bonds, 5.25%
due 7/01/2004 ..................................................................... 3,227
2,500 Arizona State University Revenue Refunding Bonds, VRDN, Series II-R-174, 1%
due 7/01/2009 (a)(d) .............................................................. 2,500
2,390 Avondale, Arizona, IDA, IDR, Refunding (National Health Investors), VRDN, 1.15%
due 12/01/2014 (a) ................................................................ 2,390
545 Buckeye, Arizona, Union High School District No. 201, School Improvement Project of
2002, GO, Series A, 2.50% due 7/01/2004 (d) ....................................... 551
2,400 Casa Grande, Arizona, IDA, IDR (Price Companies Inc. Project), VRDN, AMT, Series A,
1.20% due 12/01/2017 (a) .......................................................... 2,400
1,135 Chandler, Arizona, IDA, IDR (Red Rock Stamping Company Project), VRDN, AMT, 1.25%
due 2/01/2020 (a) ................................................................. 1,135
6,970 Coconino County, Arizona, Pollution Control Corporation Revenue Bonds (Arizona
Public Service Co. Project), VRDN, AMT, 1.20% due 11/01/2033 (a) .................. 6,970
1,000 Maricopa County, Arizona, Community College District, GO (Project of 1994),
Series D, 4% due 7/01/2004 ........................................................ 1,023
5,475 Maricopa County, Arizona, IDA, IDR (Trans-Matic Manufacturing Production Project),
VRDN, AMT, 1.17% due 10/01/2026 (a) ............................................... 5,475
6,000 Maricopa County, Arizona, IDA, M/F Housing Revenue Bonds (San Angelin Apartments
LP), AMT, 1.30% due 5/14/2004 ..................................................... 6,000
Maricopa County, Arizona, IDA, M/F Housing Revenue Refunding Bonds, VRDN, AMT (a):
2,540 (Las Gardenias Apartments LP Project), Series A, 1.125% due 4/15/2033 ....... 2,540
4,800 (San Martin Apartments Project), Series A-1, 1.125% due 6/15/2035 ........... 4,800
4,000 (San Remo Apartments Project), 1.125% due 9/15/2035 ......................... 4,000
5,000 (Villas Solanas Apartments), Series A, 1.125% due 11/15/2032 ................ 5,000
15,464 Maricopa County, Arizona, IDA, S/F Mortgage Revenue Bonds, FLOATS, VRDN, AMT,
Series 707, 1.21% due 12/01/2036 (a) .............................................. 15,464
2,500 Mesa, Arizona, IDA Revenue Bonds (Discovery Health Systems), VRDN, Series B, 1.10%
due 1/01/2029 (a)(c) .............................................................. 2,500
1,963 Phoenix, Arizona, Civic Improvement Corporation, Water System Revenue Bonds,
FLOATS, VRDN, Series 505, 5.75% due 7/01/2006 (a)(e) .............................. 1,963
Phoenix, Arizona, IDA, M/F Housing Revenue Bonds, VRDN (a):
1,000 (Bell Square Apartments Project), 1.20% due 6/01/2025 ....................... 1,000
8,420 (Mariners Pointe Apartments Project), AMT, Series A, 1.25% 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
DATES Daiy Adjustable Tax-Exempt Securities
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
PCR Pollution Control Revenue Bonds
S/F Single Family
TAN Tax Anticipation Notes
VRDN Variable Rate Demand Notes
6 CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003
Schedule of Investments (continued) (in Thousands)
Face
State Amount Municipal Bonds Value
====================================================================================================================================
Arizona Phoenix, Arizona, IDA, M/F Housing Revenue Refunding Bonds, VRDN (a):
(concluded) $ 2,100 (Lynwood Apartments Project), 1.13% due 10/01/2025 .......................... $ 2,100
4,000 (Paradise Lakes Apartments Project), 1.20% due 7/01/2025 .................... 4,000
3,800 (Westward Housing Apartments Project), AMT, Series A, 1.20% due 4/01/2033 ... 3,800
Phoenix, Arizona, IDA, Revenue Bonds, VRDN, AMT (a):
1,120 (Laich Industries Corp. Project), 1.25% due 9/01/2016 ....................... 1,120
3,960 (Swift Aviation Services Inc. Project), 1.25% due 7/01/2024 ................. 3,960
400 Phoenix, Arizona, IDA, Revenue Refunding Bonds (Valley of the Sun YMCA Project),
VRDN, 1.20% due 1/01/2031 (a) ..................................................... 400
4,942 Phoenix, Arizona, IDA, S/F Mortgage Revenue Bonds, VRDN, Series A, 1.131%
due 5/01/2006 (a) ................................................................. 4,942
1,500 Pima County, Arizona, IDA, IDR, Refunding (Brush Wellman Inc. Project), VRDN, 1.17%
due 9/01/2009 (a) ................................................................. 1,500
5,000 Pima County, Arizona, IDA, M/F Housing Revenue Refunding Bonds (La Cholla
Apartments Project), VRDN, 1.13% due 12/01/2025 (a) ............................... 5,000
Pima County, Arizona, IDA, Revenue Bonds, VRDN (a):
4,770 (Lease Purchase), 1.20% due 6/01/2007 ....................................... 4,770
4,400 (Tohono Chul Ok Project), 1.10% due 8/01/2036 ............................... 4,400
1,200 Pinal County, Arizona, IDA, PCR (Newmont Mining), DATES, VRDN, 1.20% due
12/01/2009 (a) .................................................................... 1,200
355 Prescott Valley, Arizona, Sewer Revenue Refunding Bonds, 2% due 1/01/2004 (c) ..... 356
Salt River Project, Arizona, Agriculture Improvement and Power District, Electric
System Revenue Refunding Bonds, Series A:
1,565 5.40% due 1/01/2004 ......................................................... 1,582
1,000 (Salt River Project), 3% due 1/01/2004 ...................................... 1,005
9,840 (Salt River Project), 5% due 1/01/2004 ...................................... 9,938
1,145 Scottsdale, Arizona, Refunding, GO, 2% due 7/01/2004 .............................. 1,153
5,300 Special Fund of Industrial Arizona, CP, 1.50% due 10/01/2003 ...................... 5,300
200 Tempe, Arizona, Excise Tax Revenue Bonds (Tempe Center for the Arts Project), VRDN,
1.15% due 7/01/2020 (a) ........................................................... 200
1,000 Tucson, Arizona, Airport Authority Inc., Special Revenue Bonds (LearJet Inc.),
VRDN, AMT, Series A, 1.25% due 9/01/2028 (a) ...................................... 1,000
2,315 Tucson, Arizona, IDA, IDR (Fluoresco Old Nogales Project), VRDN, AMT, 1.35%
due 8/01/2025 (a) ................................................................. 2,315
3,710 Tucson, Arizona, IDA, Revenue Bonds (United Way Capital Corporation Project), VRDN,
1.27% due 6/01/2021 (a) ........................................................... 3,710
CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003 7
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (concluded) (in Thousands)
Face
State Amount Municipal Bonds Value
====================================================================================================================================
Puerto Rico--11.4% Government Development Bank of Puerto Rico, CP:
$ 8,299 0.75% due 10/01/2003 ........................................................ $ 8,299
3,173 0.75% due 10/09/2003 ........................................................ 3,173
2,000 0.75% due 10/10/2003 ........................................................ 2,000
600 Puerto Rico Electric Power Authority, Power Revenue Bonds, MSTR, VRDN, Series
SGA-43, 1.10% due 7/01/2022 (a) ................................................... 600
Puerto Rico Public Buildings Authority Revenue Refunding Bonds, FLOATS, VRDN (a):
2,000 Series 747D, 1.08% due 7/01/2017 ............................................ 2,000
4,000 Series 787, 1.05% due 7/08/2004 ............................................. 4,000
====================================================================================================================================
Total Investments (Cost--$174,460*)--98.8% ........................................ 174,460
Other Assets Less Liabilities--1.2% ............................................... 2,140
--------
Net Assets--100.0% ................................................................ $176,600
========
(a) The interest rate is subject to change periodically based upon prevailing
market rates. The interest rate shown is the rate in effect at September
30, 2003.
(b) AMBAC Insured.
(c) MBIA Insured.
(d) FSA Insured.
(e) Prerefunded.
* Cost for Federal income tax purposes.
See Notes to Financial Statements.
8 CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003
Statement of Assets and Liabilities
As of September 30, 2003
==============================================================================================================================
Assets
- ------------------------------------------------------------------------------------------------------------------------------
Investments, at value (identified cost--$174,459,965) .................. $ 174,459,965
Cash ................................................................... 121,413
Receivables:
Beneficial interest sold ............................................ $ 1,599,847
Interest ............................................................ 450,763 2,050,610
-------------
Prepaid registration fees and other assets ............................. 30,927
-------------
Total assets ........................................................... 176,662,915
-------------
==============================================================================================================================
Liabilities
- ------------------------------------------------------------------------------------------------------------------------------
Payables:
Distributor ......................................................... 45,384
Investment adviser .................................................. 9,457
Other affiliates .................................................... 8,130
-------------
Total liabilities ...................................................... 62,971
-------------
Net Assets ............................................................. $ 176,599,944
=============
==============================================================================================================================
Net Assets Consist of
- ------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest, $.10 par value, unlimited number of shares
authorized ........................................................... $ 17,668,308
Paid-in capital in excess of par ....................................... 159,014,660
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 176,683,079 shares of
beneficial interest outstanding ...................................... $ 176,599,944
=============
See Notes to Financial Statements.
CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003 9
[LOGO] Merrill Lynch Investment Managers
Statement of Operations
For the Six Months Ended September 30, 2003
==============================================================================================================================
Investment Income
- ------------------------------------------------------------------------------------------------------------------------------
Interest and amortization of premium and discount earned ............... $ 1,056,459
==============================================================================================================================
Expenses
- ------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees ............................................... $ 480,026
Distribution fees ...................................................... 117,790
Professional fees ...................................................... 28,940
Accounting services .................................................... 26,701
Registration fees ...................................................... 11,447
Transfer agent fees .................................................... 9,092
Printing and shareholder reports ....................................... 8,748
Custodian fees ......................................................... 5,255
Pricing fees ........................................................... 2,799
Trustees' fees and expenses ............................................ 862
Other .................................................................. 5,003
-------------
Total expenses before waiver ........................................... 696,663
Waiver of expenses ..................................................... (6,549)
-------------
Total expenses after waiver ............................................ 690,114
-------------
Investment income--net ................................................. 366,345
-------------
Net Increase in Net Assets Resulting from Operations ................... $ 366,345
=============
See Notes to Financial Statements.
10 CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
September 30, March 31,
Increase (Decrease) in Net Assets: 2003 2003
==============================================================================================================================
Operations
- ------------------------------------------------------------------------------------------------------------------------------
Investment income--net ................................................. $ 366,345 $ 1,522,314
-------------------------------
Net increase in net assets resulting from operations ................... 366,345 1,522,314
-------------------------------
==============================================================================================================================
Dividends to Shareholders
- ------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from investment income--net .................. (366,345) (1,522,314)
-------------------------------
==============================================================================================================================
Beneficial Interest Transactions
- ------------------------------------------------------------------------------------------------------------------------------
Net proceeds from sale of shares ....................................... 500,556,317 864,504,814
Value of shares issued to shareholders in reinvestment of dividends .... 366,315 1,522,387
-------------------------------
500,922,632 866,027,201
Cost of shares redeemed ................................................ (515,135,184) (902,922,723)
-------------------------------
Net decrease in net assets derived from beneficial interest transactions (14,212,552) (36,895,522)
-------------------------------
==============================================================================================================================
Net Assets
- ------------------------------------------------------------------------------------------------------------------------------
Total decrease in net assets ........................................... (14,212,552) (36,895,522)
Beginning of period .................................................... 190,812,496 227,708,018
-------------------------------
End of period* ......................................................... $ 176,599,944 $ 190,812,496
===============================
* Undistributed investment income--net .............................. $ 45 $ 45
===============================
See Notes to Financial Statements.
CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003 11
[LOGO] Merrill Lynch Investment Managers
Financial Highlights
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended For the Year Ended March 31,
September 30, ------------------------------------------------------
Increase (Decrease) in Net Asset Value: 2003 2003 2002 2001 2000
==================================================================================================================================
Per Share Operating Performance
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ..... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------------------------------------------------------------------
Investment income--net ................... --+ .01 .02 .03 .03
Realized gain on investments--net ........ -- -- -- --+ --+
---------------------------------------------------------------------
Total from investment operations ......... --+ .01 .02 .03 .03
---------------------------------------------------------------------
Less dividends from investment income--net --++ (.01) (.02) (.03) (.03)
---------------------------------------------------------------------
Net asset value, end of period ........... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=====================================================================
Total Investment Return .................. .38%* .77% 1.68% 3.37% 2.80%
=====================================================================
==================================================================================================================================
Ratios to Average Net Assets
- ----------------------------------------------------------------------------------------------------------------------------------
Expenses, net of waiver .................. .72%* .72% .71% .74% .71%
=====================================================================
Expenses ................................. .73%* .72% .71% .74% .71%
=====================================================================
Investment income--net ................... .38%* .78% 1.71% 3.31% 2.76%
=====================================================================
==================================================================================================================================
Supplemental Data
- ----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) . $ 176,600 $ 190,812 $ 227,708 $ 248,880 $ 227,210
=====================================================================
* Annualized.
+ Amount is less than $.01 per share.
++ Amount is less than $(.01) per share.
See Notes to Financial Statements.
12 CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003
Notes to Financial Statements
1. Significant Accounting Policies:
CMA Arizona Municipal Money Fund (the "Fund") is part of CMA Multi-State
Municipal Series Trust (the "Trust"). The Fund is registered under the
Investment Company Act of 1940, as amended, 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. These
unaudited financial statements reflect all adjustments, which are, in the
opinion of management, necessary to a fair statement of the results for the
interim period presented. All such adjustments are of a normal, recurring
nature. The following is a summary of significant accounting policies followed
by the Fund.
(a) Valuation of investments -- Investments are valued at amortized cost, which
approximates market value. For the purpose of valuation, the maturity of a
variable rate demand instrument is deemed to be the 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. For the
six months ended September 30, 2003 FAM earned fees of $480,026, of which $6,549
was waived.
CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003 13
[LOGO] Merrill Lynch Investment Managers
Notes to Financial Statements (concluded)
Pursuant to the Distribution and Shareholder Servicing Plan in compliance with
Rule 12b-1 under the Investment Company Act of 1940, Merrill Lynch, Pierce,
Fenner & Smith 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
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 six months ended September 30, 2003, the Fund reimbursed FAM $2,160 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. Capital Loss Carryforward:
On March 31, 2003, the Fund had a net capital loss carryforward of $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.
These amounts will be available to offset like amounts of any future taxable
gains.
14 CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003
Electronic Delivery
The Fund is now offering electronic delivery of communications to its
shareholders. In order to receive this service, you must register your account
and provide us with e-mail information. To sign up for this service, simply
access this website http://www.icsdelivery.com/live and follow the instructions.
When you visit this site, you will obtain a personal identification number
(PIN). You will need this PIN should you wish to update your e-mail address,
choose to discontinue this service and/or make any other changes to the service.
This service is not available for certain retirement accounts at this time.
CMA ARIZONA MUNICIPAL MONEY FUND SEPTEMBER 30, 2003 15
[LOGO] Merrill Lynch Investment Managers 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 Arizona Municipal Money Fund
of CMA Multi-State Municipal Series Trust
Box 9011
Princeton, NJ
08543-9011
#16714 -- 9/03
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 (annual requirement only)
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 (annual requirement
only)
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. N/A
(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
Item 8 -- Reserved
Item 9(a) - The registrant's certifying officers have reasonably designed such
disclosure controls and procedures to ensure material information
relating to the registrant is made known to us by others
particularly during the period in which this report is being
prepared. The registrant's certifying officers have determined that
the registrant's disclosure controls and procedures are effective
based on our evaluation of these controls and procedures as of a
date within 90 days prior to the filing date of this report.
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 of CMA Multi-State Municipal Series
Trust
By: /s/ Terry K. Glenn
-----------------------------
Terry K. Glenn,
President of
CMA Arizona Municipal Money Fund of CMA Multi-State Municipal
Series Trust
Date: November 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 of CMA Multi-State Municipal
Series Trust
Date: November 21, 2003
By: /s/ Donald C. Burke
-----------------------------
Donald C. Burke,
Chief Financial Officer of
CMA Arizona Municipal Money Fund of CMA Multi-State Municipal
Series Trust
Date: November 21, 2003
Attached hereto as a furnished exhibit are the certifications pursuant
to Section 906 of the Sarbanes-Oxley Act.