UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number 811-3703
Name of Fund: CBA Money Fund
Fund Address: P.O. Box 9011
Princeton, NJ 08543-9011
Name and address of agent for service: Terry K. Glenn, President, CBA 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: 02/29/04
Date of reporting period: 03/01/04 - 08/31/04
Item 1 - Report to Stockholders
[LOGO] Merrill Lynch Investment Managers www.mlim.ml.com
CBA Money Fund
Semi-Annual Report
August 31, 2004
[LOGO] Merrill Lynch Investment Managers
CBA Money Fund
Officers and Trustees
Terry K. Glenn, President and Trustee
Ronald W. Forbes, Trustee
Cynthia A. Montgomery, Trustee
Jean Margo Reid, Trustee
Kevin A. Ryan, Trustee
Roscoe S. Suddarth, Trustee
Richard R. West, Trustee
Edward D. Zinbarg, Trustee
Richard J. Mejzak, Vice President
Donald C. Burke, Vice President and Treasurer
Jeffrey Hiller, Chief Compliance Officer
Alice A. Pellegrino, 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 CBA account, call 800-247-6400.
Electronic Delivery
The Fund offers 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 Web
site 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.
2 CBA MONEY FUND AUGUST 31, 2004
A Letter From the President
Dear Shareholder
In recent months, the Federal Reserve Board (the Fed) has taken center stage as
it shifts away from its long-accommodative monetary stance. The Fed raised the
Federal Funds rate 75 basis points (.75%) in three separate moves since June,
bringing the target short-term interest rate to 1.75% -- still low by historical
standards. The Fed has been deliberate in telegraphing its intention to take a
"measured" approach to interest rate increases in order to avoid upsetting the
economy or the financial markets, while still leaving room to move more
aggressively if inflation and economic growth accelerate more than anticipated.
The forward curve currently projects further increases in short-term interest
rates before year-end. In addition to the Fed policy change, the financial
markets recently have had to grapple with a tense geopolitical environment,
higher oil prices and the worry and anticipation that accompanies a presidential
election.
The transition to higher rates can cause concern among equity and fixed income
investors alike. For bond investors, rising interest rates means the value of
older issues declines because they bear the former lower interest rates. In
addition, increasing inflation erodes the purchasing power of fixed income
securities. Nevertheless, for the six-month and 12-month periods ended August
31, 2004, fixed income markets provided positive results. For example, the
Lehman Brothers Aggregate Bond Index returned +1.15% and +6.13%; the Credit
Suisse First Boston High Yield Index returned +3.42% and +14.68%; and the
Citigroup Mortgage Index returned +1.79% and +6.07% for the six-month and
12-month periods, respectively.
As always, our investment professionals are closely monitoring the markets, the
economy and the overall environment in an effort to make well-informed decisions
for the portfolios they manage. Our goal is to provide shareholders with
competitive returns, while always keeping one eye on managing the unavoidable
risk inherent in investing.
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
CBA MONEY FUND AUGUST 31, 2004 3
[LOGO] Merrill Lynch Investment Managers
A Discussion With Your Fund's Portfolio Manager
In anticipation of a series of interest rate hikes by the Federal Reserve
Board, we began to target shorter sectors of the yield curve and gradually
reduce duration, while continuing to focus on variable rate securities.
How did the Fund perform during the period in light of the existing market
conditions?
For the six-month period ended August 31, 2004, CBA Money Fund paid shareholders
a net annualized dividend of .34%. The Fund's seven-day yield as of August 31,
2004, was .65%.
The Fund's average portfolio maturity at August 31, 2004, was 62 days, compared
to 69 days as of February 29, 2004. The Fund's average maturity during the
six-month period ranged from a low of 57 days to a high of 76 days.
After a prolonged period of unchanged monetary policy, the Federal Reserve Board
(the Fed) recently embarked on a tightening cycle with three separate .25%
interest rate hikes in June, August and September. The Federal Funds target rate
currently stands at 1.75%, after remaining at 1% for slightly more than a year.
The Fed policy change was primarily prompted by three consecutive months of
robust payroll data for March, April and May. This sector of the economy had
lagged considerably in the recovery, until the March employment report finally
began to show clear signs that adequate job creation was underway. Accordingly,
we saw yields rise steadily throughout the six-month period. In this
environment, we found that concentrating on shorter sectors of the yield curve
and maintaining an overweight position in the variable rate sectors proved
beneficial.
How did you manage the portfolio during the period?
The market was given ample warning for the Fed's first interest rate increase in
late June, as the first in a series of strong employment reports was released in
early April. Although a move to higher interest rates was imminent, the Fed
clearly telegraphed its intentions to move at a "measured" pace. In our view,
the appropriate strategy was not necessarily to aggressively shorten the Fund's
overall duration, but rather to target shorter sectors of the yield curve while
still maintaining a slightly shorter, but still fairly constructive, portfolio
duration (typically 65 days - 70 days). We were able to implement this strategy
because of our concentration in variable rate securities, which made up
approximately 65% of the Fund's net assets. Because the coupons on variable rate
securities are continually resetting, that portion of the portfolio offers a
level of protection in a period of rising interest rates, enabling us to be
slightly more active with the remainder of our investments.
As expected, the front end of the yield curve was fairly steep. Thus, we found
both higher yields and greater value in maturities as short as six months. In
the early stages of a rising interest rate environment, such as the current
cycle, the two-year sector typically underperforms the rest of the yield curve.
For that reason, we were extremely wary of the longer sectors. Fair value for
the two-year Treasury note historically has been considered to be approximately
75 basis points (.75%) higher than the Federal Funds level. With a current yield
of 2.55%, we see limited value, as we expect the Federal Funds level will be
over 2% in two years time.
How would you characterize the portfolio's position at the close of the period?
We maintain our belief that, from a risk/reward perspective, greater value
exists in the shorter sectors of the yield curve compared to the one-year and
longer sectors. Specifically, March interest rate futures, which determine the
yields for money market securities, are currently pricing in quarter-point
interest rate increases at each of the next three Federal Open Market Committee
meetings in September, November and December. (The Fed did in fact raise
interest rates a quarter point at its September meeting.) Although we believe
the long-term trend clearly points to higher interest rates, we feel some of the
forward rates in this six-month sector may be
4 CBA MONEY FUND AUGUST 31, 2004
overzealous. In our opinion, the Fed may not have to move at each of the
remaining meetings this year. The uncertainty of the upcoming election, high oil
prices and the continued fear of a terrorist strike pose legitimate threats to a
sustainable recovery. Thus, we have been active in this sector via certificates
of deposit earlier in the period and, more recently, through agency discount
notes. Abundant issuance by the government-sponsored enterprises in the front
end has caused spreads to tighten and, given the negligible difference in yield,
we prefer discount notes for both credit quality and liquidity purposes. As a
result, our variable rate holdings have recently declined to 55% of net assets.
However, given the unattractive spreads to commercial paper, we find little
reason to add any floaters at current levels. Our duration target is currently
moderately more conservative at 55 days - 65 days, allowing us some flexibility
should a sudden spike in yields occur.
The Fund's portfolio composition as a percent of net assets at the end of the
period and as of our last report to shareholders is detailed below:
--------------------------------------------------------------------------------
8/31/04 2/29/04
--------------------------------------------------------------------------------
Bank Notes ....................................... 6.0% 8.9%
Certificates of Deposit--European ................ 2.7 1.6
Certificates of Deposit--Yankee* ................. 6.0 3.1
Commercial Paper ................................. 26.5 27.6
Funding Agreements ............................... 6.6 10.5
Medium-Term Notes ................................ 13.2 5.5
U.S. Government & Agency
Obligations--Discount Notes ................... 2.0 6.6
U.S. Government & Agency
Obligations--Non-Discount Notes ............... 37.3 38.5
Liabilities in Excess of Other Assets ............ (0.3) (2.3)
--------------------
Total ............................................ 100.0% 100.0%
====================
* U.S. branches of foreign banks.
Richard J. Mejzak
Vice President and Portfolio Manager
September 22, 2004
CBA MONEY FUND AUGUST 31, 2004 5
[LOGO] Merrill Lynch Investment Managers
Disclosure of Expenses
Shareholders of this Fund may incur the following charges: (a) expenses related
to transactions, including sales charges, redemption fees and exchange fees; and
(b) operating expenses, including advisory fees, distribution fees including
12(b)-1 fees, and other Fund expenses. The following example (which is based on
a hypothetical investment of $1,000 invested on March 1, 2004 and held through
August 31, 2004) is intended to assist shareholders both in calculating expenses
based on an investment in the Fund and in comparing these expenses with similar
costs of investing in other mutual funds.
The first table below provides information about actual account values and
actual expenses. In order to estimate the expenses a shareholder paid during the
period covered by this report, shareholders can divide their account value by
$1,000 and then multiply the result by the number in the first line under the
heading entitled "Expenses Paid During the Period."
The second table below provides information about hypothetical account values
and hypothetical expenses based on the Fund's actual expense ratio and an
assumed rate of return of 5% per year before expenses. In order to assist
shareholders in comparing the ongoing expenses of investing in this Fund and
other funds, compare the 5% hypothetical example with the 5% hypothetical
examples that appear in other funds' shareholder reports.
The expenses shown in the table are intended to highlight shareholders ongoing
costs only and do not reflect any transactional expenses, such as sales charges,
redemption fees, or exchange fees. Therefore, the second table is useful in
comparing ongoing expenses only, and will not help shareholders determine the
relative total expenses of owning different funds. If these transactional
expenses were included, shareholder expenses would have been higher.
Expenses Paid
Beginning Ending During the Period*
Account Value Account Value March 1, 2004
March 1, 2004 August 31, 2004 to August 31, 2004
================================================================================
Actual
================================================================================
CBA Money Fund $1,000 $1,003.40 $4.75
================================================================================
Hypothetical (5% annual return before expenses)**
================================================================================
CBA Money Fund $1,000 $1,020.74 $4.79
--------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of .93%,
multiplied by the average account value over the period, multiplied by
186/365 (to reflect the one-half year period shown).
** Hypothetical 5% annual return before expenses is calculated by pro-rating
the number of days in the most recent fiscal half-year divided by 365.
6 CBA MONEY FUND AUGUST 31, 2004
Schedule of Investments as of August 31, 2004 (in Thousands)
Face Interest Maturity
Issue Amount Rate* Date Value
===================================================================================================
Bank Notes--6.0%
===================================================================================================
Bank of $ 9,000 1.55+% 1/28/2005 $ 9,000
America, NA
---------------------------------------------------------------------------------------------------
Total Bank Notes (Cost--$9,000) ......................................................... 9,000
===================================================================================================
Certificates of Deposit--European--2.7%
===================================================================================================
Credit Agricole 3,000 1.27 12/31/2004 2,994
Indosuez, London
---------------------------------------------------------------------------------------------------
Landesbank 1,000 1.28 9/13/2004 1,000
Hessen-Thuringen
Girozentrale
---------------------------------------------------------------------------------------------------
Total Certificates of Deposit--European
(Cost--$4,000) .......................................................................... 3,994
===================================================================================================
Certificates of Deposit--Yankee--6.0%
===================================================================================================
ABN AMRO Bank 5,000 1.25 4/05/2005 4,977
NV, NY
---------------------------------------------------------------------------------------------------
BNP Paribas, NY 2,500 2.06 3/31/2005 2,501
---------------------------------------------------------------------------------------------------
HBOS Treasury 1,500 2.025 3/29/2005 1,500
Services PLC, NY
---------------------------------------------------------------------------------------------------
Total Certificates of Deposit--Yankee
(Cost--$9,000) .......................................................................... 8,978
===================================================================================================
Commercial Paper--26.5%
===================================================================================================
Amsterdam Funding 3,000 1.53 9/21/2004 2,997
Corporation
---------------------------------------------------------------------------------------------------
Barton Capital 5,000 1.53 9/09/2004 4,998
LLC
---------------------------------------------------------------------------------------------------
Blue Ridge Asset 3,000 1.50 9/13/2004 2,998
Funding Corporation 3,014 1.53 9/15/2004 3,012
---------------------------------------------------------------------------------------------------
HBOS Treasury 1,825 1.34 9/07/2004 1,824
Services PLC
---------------------------------------------------------------------------------------------------
Kitty Hawk Funding 2,631 1.54 9/27/2004 2,628
Corporation
---------------------------------------------------------------------------------------------------
Morgan Stanley 1,100 1.58+ 10/28/2004 1,100
---------------------------------------------------------------------------------------------------
Old Line 4,479 1.53 9/20/2004 4,475
Funding, LLC
---------------------------------------------------------------------------------------------------
PB Finance 600 1.49 9/03/2004 600
(Delaware), Inc. 1,147 1.55 9/21/2004 1,146
---------------------------------------------------------------------------------------------------
Park Avenue 3,480 1.54 9/10/2004 3,479
Receivables
Company
---------------------------------------------------------------------------------------------------
Sheffield 4,000 1.49 9/03/2004 4,000
Receivables 3,000 1.53 9/08/2004 2,999
Corporation
---------------------------------------------------------------------------------------------------
Thunder Bay 3,618 1.50 9/01/2004 3,618
Funding LLC
---------------------------------------------------------------------------------------------------
Total Commercial Paper
(Cost--$39,874) ......................................................................... 39,874
===================================================================================================
Funding Agreements--6.6%
===================================================================================================
Monumental Life 10,000 1.637+ 5/16/2005 (a) 10,000
Insurance Company
---------------------------------------------------------------------------------------------------
Total Funding Agreements (Cost--$10,000) ................................................ 10,000
===================================================================================================
Medium-Term Notes--13.2%
===================================================================================================
American Honda 3,600 1.748+ 3/11/2005 3,607
Finance Corporation
---------------------------------------------------------------------------------------------------
Dorada Finance 4,500 1.76+ 3/15/2005 4,503
Incorporated
---------------------------------------------------------------------------------------------------
General Electric 4,000 1.68+ 9/16/2005 4,000
Capital Corporation
---------------------------------------------------------------------------------------------------
Morgan Stanley 1,000 1.514+ 9/02/2005 1,000
810 1.64+ 9/27/2005 810
---------------------------------------------------------------------------------------------------
Sigma Finance Inc. 6,000 1.513+ 8/08/2005 5,998
---------------------------------------------------------------------------------------------------
Total Medium-Term Notes (Cost--$19,920) ................................................. 19,918
===================================================================================================
U.S. Government & Agency Obligations--
Discount Notes--2.0%
===================================================================================================
Federal Home 2,000 1.245 2/08/2005 1,984
Loan Mortgage
Corporation
---------------------------------------------------------------------------------------------------
Federal National 1,000 1.21 1/07/2005 994
Mortgage
Association
---------------------------------------------------------------------------------------------------
Total U.S. Government & Agency Obligations--
Discount Notes (Cost--$2,979) ........................................................... 2,978
---------------------------------------------------------------------------------------------------
CBA MONEY FUND AUGUST 31, 2004 7
[LOGO] Merrill Lynch Investment Managers
Schedule of Investments (concluded) (in Thousands)
Face Interest Maturity
Issue Amount Rate* Date Value
===================================================================================================
U.S. Government & Agency Obligations--
Non-Discount Notes--37.3%
===================================================================================================
Federal Farm $14,000 1.50+% 2/07/2005 $ 13,999
Credit Bank 5,000 1.52+ 2/24/2005 5,000
1,300 1.53+ 2/21/2006 1,300
500 1.58+ 3/08/2006 500
750 1.55+ 2/20/2008 750
---------------------------------------------------------------------------------------------------
Federal Home 800 3.875 12/15/2004 804
Loan Bank 825 1.50 5/13/2005 822
3,000 1.50 8/26/2005 2,983
---------------------------------------------------------------------------------------------------
Federal Home 500 2.41 11/04/2005 501
Loan Mortgage 3,250 1.665+ 11/07/2005 3,251
Corporation 1,000 2.30 11/17/2005 1,000
2,000 2.35 12/09/2005 2,001
---------------------------------------------------------------------------------------------------
Federal National 5,600 1.50+ 8/17/2005 5,598
Mortgage 1,750 2.11 8/26/2005 1,749
Association 9,000 1.523+ 8/29/2005 8,996
4,500 1.23+ 9/06/2005 4,497
400 2.32 9/30/2005 400
550 2.07 10/21/2005 549
550 2.10 10/21/2005 549
500 2.375 5/04/2006 499
---------------------------------------------------------------------------------------------------
U.S. Treasury
Notes 300 1.50 3/31/2006 297
---------------------------------------------------------------------------------------------------
Total U.S. Government & Agency Obligations--
Non-Discount Notes (Cost--$56,060) ...................................................... 56,045
---------------------------------------------------------------------------------------------------
Total Investments
(Cost--$150,833**)--100.3% .............................................................. 150,787
Liabilities in Excess of Other Assets--(0.3%) ........................................... (500)
--------
Net Assets--100.0% ...................................................................... $150,287
========
+ Variable rate notes.
* Commercial Paper and certain U.S. Government & Agency Obligations are
traded on a discount basis; the interest rates shown reflect the discount
rates paid at the time of purchase by the Fund. Other securities bear
interest at the rates shown, payable at fixed dates or upon maturity.
Interest rates on variable rate securities are adjusted periodically based
upon appropriate indexes; the interest rates shown are those in effect at
August 31, 2004.
** The cost and unrealized appreciation/depreciation of investments as of
August 31, 2004, as computed for federal income tax purposes, were as
follows:
(in Thousands)
--------------------------------------------------------------------------
Aggregate cost ................................................ $150,833
========
Gross unrealized appreciation ................................. $ 5
Gross unrealized depreciation ................................. (51)
--------
Net unrealized depreciation ................................... $ (46)
========
(a) Restricted securities as to resale.
(in Thousands)
--------------------------------------------------------------------------
Acquisition
Issue Date Cost Value
--------------------------------------------------------------------------
Monumental Life Insurance
Company, 1.637%
due 5/16/2005 5/18/2004 $10,000 $10,000
--------------------------------------------------------------------------
Total $10,000 $10,000
==========================================================================
See Notes to Financial Statements.
8 CBA MONEY FUND AUGUST 31, 2004
Statement of Assets and Liabilities
As of August 31, 2004
===================================================================================================================
Assets
-------------------------------------------------------------------------------------------------------------------
Investments in unaffiliated securities, at value
(identified cost--$150,832,665) ........................ $ 150,787,179
Interest receivable ..................................... 206,607
Other assets ............................................ 369,110
-------------
Total assets ............................................ 151,362,896
-------------
===================================================================================================================
Liabilities
-------------------------------------------------------------------------------------------------------------------
Payables:
Securities purchased ................................. $ 900,000
Custodian bank ....................................... 58,593
Distributor .......................................... 41,485
Other affiliates ..................................... 40,419
Investment adviser ................................... 8,272 1,048,769
-------------
Accrued expenses and other liabilities .................. 26,823
-------------
Total liabilities ....................................... 1,075,592
-------------
Net assets .............................................. $ 150,287,304
=============
===================================================================================================================
Net Assets Consist of
-------------------------------------------------------------------------------------------------------------------
Shares of beneficial interest, $.10 par value, unlimited
number of shares authorized ............................ $ 15,033,279
Paid-in capital in excess of par ........................ 135,299,511
Unrealized depreciation--net ............................ (45,486)
-------------
Net Assets--Equivalent to $1.00 per share based on
150,332,790 shares of beneficial interest outstanding .. $ 150,287,304
=============
See Notes to Financial Statements.
CBA MONEY FUND AUGUST 31, 2004 9
[LOGO] Merrill Lynch Investment Managers
Statement of Operations
For the Six Months Ended August 31, 2004
===================================================================================================================
Investment Income
-------------------------------------------------------------------------------------------------------------------
Interest and amortization of premium and discount earned $ 1,095,281
===================================================================================================================
Expenses
-------------------------------------------------------------------------------------------------------------------
Investment advisory fees ................................ $ 434,394
Transfer agent fees ..................................... 132,387
Distribution fees ....................................... 107,434
Professional fees ....................................... 34,758
Printing and shareholder reports ........................ 27,385
Accounting services ..................................... 27,311
Registration fees ....................................... 14,183
Trustees' fees and expenses ............................. 11,690
Custodian fees .......................................... 7,902
Pricing expense ......................................... 670
Other ................................................... 13,625
-------------
Total expenses .......................................... 811,739
-------------
Investment income--net .................................. 283,542
-------------
Realized gain on investments--net ....................... 4,894
Change in unrealized appreciation/depreciation on
investments--net ....................................... (108,282)
-------------
Total realized and unrealized loss on investments--net .. (103,388)
-------------
Net Increase in Net Assets Resulting from Operations .... $ 180,154
=============
See Notes to Financial Statements.
10 CBA MONEY FUND AUGUST 31, 2004
Statements of Changes in Net Assets
For the Six For the
Months Ended Year Ended
August 31, February 29,
Increase (Decrease) in Net Assets: 2004 2004
===================================================================================================================
Operations
-------------------------------------------------------------------------------------------------------------------
Investment income--net .................................. $ 283,542 $ 934,356
Realized gain--net ...................................... 4,894 48,569
Change in unrealized appreciation/depreciation--net ..... (108,282) 7,381
-------------------------------
Net increase in net assets resulting from operations .... 180,154 990,306
-------------------------------
===================================================================================================================
Dividends & Distributions to Shareholders
-------------------------------------------------------------------------------------------------------------------
Investment income--net .................................. (283,542) (934,356)
Realized gain--net ...................................... (4,894) (48,569)
-------------------------------
Net decrease in net assets resulting from dividends and
distributions to shareholders .......................... (288,436) (982,925)
-------------------------------
===================================================================================================================
Beneficial Interest Transactions
-------------------------------------------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions ............ 288,436 982,787
Cost of shares redeemed ................................. (40,743,329) (112,510,774)
-------------------------------
Net decrease in net assets derived from beneficial
interest transactions .................................. (40,454,893) (111,527,987)
-------------------------------
===================================================================================================================
Net Assets
-------------------------------------------------------------------------------------------------------------------
Total decrease in net assets ............................ (40,563,175) (111,520,606)
Beginning of period ..................................... 190,850,479 302,371,085
-------------------------------
End of period ........................................... $ 150,287,304 $ 190,850,479
===============================
See Notes to Financial Statements.
CBA MONEY FUND AUGUST 31, 2004 11
[LOGO] Merrill Lynch Investment Managers
Financial Highlights
The following per share data and ratios have been derived For the Six For the For the Year Ended
from information provided in the financial statements. Months Ended Year Ended February 28,
August 31, February 29, -------------------------------------
Increase (Decrease) in Net Asset Value: 2004 2004 2003 2002 2001
===================================================================================================================================
Per Share Operating Performance
-----------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period ...... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------------------------------------------------------------
Investment income--net ................. .0017 .0037 .0110 .0331 .0567
Realized and unrealized gain (loss)--net (.0007) .0002 (.0007) (.0020) .0021
-------------------------------------------------------------------
Total from investment operations .......... .0010 .0039 .0103 .0311 .0588
-------------------------------------------------------------------
Less dividends and distributions:
Investment income--net ................. (.0017) (.0037) (.0110) (.0331) (.0567)
Realized gain--net ..................... --+ (.0002) (.0003) (.0003) (.0001)
-------------------------------------------------------------------
Total dividends and distributions ......... (.0017) (.0039) (.0113) (.0334) (.0568)
-------------------------------------------------------------------
Net asset value, end of period ............ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===================================================================
Total investment return ................... .34%* .39% 1.13% 3.35% 5.83%
===================================================================
===================================================================================================================================
Ratios to Average Net Assets
-----------------------------------------------------------------------------------------------------------------------------------
Expenses .................................. .93%* .87% .87% .83% .75%
===================================================================
Investment income and realized gain on
investments--net ......................... .33%* .41% 1.16% 3.53% 5.67%
===================================================================
===================================================================================================================================
Supplemental Data
-----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) .. $ 150,287 $ 190,850 $ 302,371 $ 540,669 $1,199,550
===================================================================
* Annualized.
+ Amount is less than ($.0001) per share.
See Notes to Financial Statements.
12 CBA MONEY FUND AUGUST 31, 2004
Notes to Financial Statements
1. Significant Accounting Policies:
CBA Money Fund (the "Fund") is a money market fund whose shares are held in
certain accounts at Merrill Lynch, Pierce, Fenner & Smith Incorporated
("MLPF&S"). The Fund is currently not offering any new shares to the public
except through dividend reinvestment. The Fund is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund's financial statements are prepared in
conformity with U.S. generally accepted accounting principles, which may require
the use of management accruals and estimates. Actual results may differ from
these estimates. These unaudited financial statements reflect all adjustments,
which are, in the opinion of management, necessary to present a fair statement
of the results for the interim period. 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 -- Portfolio securities with remaining maturities
of greater than sixty days, for which market quotations are readily available,
are valued at market value. As securities transition from sixty-one to sixty
days to maturity, the difference between the valuation existing on the
sixty-first day before maturity and maturity value is amortized on a
straight-line basis to maturity. Securities maturing sixty days or less from
their date of acquisition are valued at amortized cost, which approximates
market value. For purposes of valuation, the maturity of a variable rate
security is deemed to be the next coupon date on which the interest rate is to
be adjusted. Other investments and assets for which market quotations are not
available are valued at their fair value as determined in good faith by or under
the direction of the Board of Trustees.
(b) Repurchase agreements -- The Fund may invest in money market securities
pursuant to repurchase agreements. Under such agreements, the counterparty
agrees to repurchase the security at a mutually agreed upon time and price. The
Fund takes possession of the underlying securities, marks to market such
securities and, if necessary, receives additional securities daily to ensure
that the contract is fully collateralized. If the counterparty defaults and the
fair value of the collateral declines, liquidation of the collateral by the Fund
may be delayed or limited.
(c) 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 all of its taxable income to its shareholders. Therefore, no federal
income tax provision is required.
(d) 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.
(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 and distributions are declared from the total of net investment income
and net realized gain or loss on investments.
(f) Securities lending -- The Fund may lend securities to financial institutions
that provide cash or securities issued or guaranteed by the U.S. government as
collateral, which will be maintained at all times in an amount equal to at least
100% of the current market value of the loaned securities. The market value of
the loaned securities is determined at the close of business of the Fund and any
additional required collateral is delivered to the Fund on the next business
day. Where the Fund receives securities as collateral for the loaned securities,
it collects a fee from the borrower. The Fund typically receives the income on
the loaned securities but does not receive the income on the collateral. Where
the Fund receives cash collateral, it may invest such collateral and retain the
amount earned on such investment, net of any amount rebated to the borrower.
Loans of securities are terminable at any time and the borrower, after notice,
is required to return borrowed securities within five business days. The Fund
may pay reasonable finder's, lending agent, administrative and custodial fees in
connection with its loans. In the event that the borrower defaults on its
obligation to return borrowed securities because of insolvency or for any other
reason, the Fund could experience delays and costs in gaining access to the
collateral. The Fund also could suffer a loss where the value of the collateral
falls below the market value of the borrowed securities, in the event of
borrower default or in the event of losses on investments made with cash
collateral.
CBA MONEY FUND AUGUST 31, 2004 13
[LOGO] Merrill Lynch Investment Managers
Notes to Financial Statements (concluded)
(g) Custodian bank -- The Fund recorded an amount payable to the custodian bank
reflecting an overnight overdraft, which resulted from management estimates of
available cash.
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.
The Fund has received an exemptive order from the Securities and Exchange
Commission permitting it to lend portfolio securities to MLPF&S or its
affiliates. Pursuant to that order, the Fund also has retained Merrill Lynch
Investment Managers, LLC ("MLIM, LLC"), an affiliate of FAM, as the securities
lending agent for a fee based on a share of the returns on investment of cash
collateral. MLIM, LLC may, on behalf of the Fund, invest cash collateral
received by the Fund for such loans, among other things, in a private investment
company managed by MLIM, LLC or in registered money market funds advised by FAM
or its affiliates.
The Fund has adopted a Distribution and Shareholder Servicing Plan in compliance
with Rule 12b-1 under the Investment Company Act of 1940, pursuant to which
MLPF&S receives a distribution fee under the Distribution Agreement from the
Fund at the end of each month at the annual rate of .125% of average daily net
assets of the Fund attributable to subscribers. The MLPF&S distribution fee is
to compensate MLPF&S and its financial advisors and other directly involved
branch office personnel for providing direct personal services to shareholders
and 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 August 31, 2004, the Fund reimbursed FAM $1,936 for
certain accounting services.
Certain officers and/or trustees of the Fund are officers and/or directors of
FAM, PSI, FDS, ML & Co., and/or MLIM, LLC.
3. Beneficial Interest Transactions:
The number of shares reinvested and redeemed during the periods corresponds to
the amounts included in the Statements of Changes in Net Assets, value of shares
reinvested and cost of shares redeemed, respectively, since shares are recorded
at $1.00 per share.
4. Subsequent Event:
On or about October 18, 2004, there will be an exchange of Fund shares for
shares of CMA Money Fund. Fund shares held by shareholders will be automatically
sold, and the proceeds of that redemption will be reinvested at net asset value
in shares of CMA Money Fund. CMA Money Fund is a money market mutual fund with
the same investment objective and portfolio managers as the Fund, but with a
larger asset base and a lower expense ratio. This redemption and subscription of
shares will occur on the same day, ensuring no interruption in shareholders'
dividends.
14 CBA MONEY FUND AUGUST 31, 2004
Availability of Quarterly Schedule of Investments
The Fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission ("SEC") for the first and third quarters of each fiscal
year on Form N-Q. The Fund's Forms N-Q are available on the SEC's Web site at
http://www.sec.gov. The Fund's Forms N-Q may also be reviewed and copied at the
SEC's Public Reference Room in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling 1-800-SEC-0330.
CBA MONEY FUND AUGUST 31, 2004 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 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.
A description of the policies and procedures that the Fund uses to determine how
to vote proxies relating to portfolio securities is available (1) without
charge, upon request, by calling toll-free 1-800-MER-FUND (1-800-637-3863); (2)
at www.mutualfunds.ml.com; and (3) on the Securities and Exchange Commission's
Web site at http://www.sec.gov. Information about how the Fund voted proxies
relating to securities held in the Fund's portfolio during the most recent
12-month period ended June 30 is available (1) at www.mutualfunds.ml.com and (2)
on the Securities and Exchange Commission's Web site at http://www.sec.gov.
CBA Money Fund
Box 9011
Princeton, NJ
08543-9011
#11676 -- 8/04
Item 2 - Code of Ethics - Not Applicable to this semi-annual report
Item 3 - Audit Committee Financial Expert - Not Applicable to this semi-annual
report
Item 4 - Principal Accountant Fees and Services - Not Applicable to this
semi-annual report
Item 5 - Audit Committee of Listed Registrants - Not Applicable
Item 6 - Schedule of Investments - Not Applicable
Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies - Not Applicable
Item 8 - Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers - Not Applicable
Item 9 - Submission of Matters to a Vote of Security Holders - Not Applicable
Item 10 - Controls and Procedures
10(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.
10(b) - There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Act (17 CFR
270.30a-3(d)) that occurred during the last fiscal half-year of the
period covered by this report that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting.
Item 11 - Exhibits attached hereto
11(a)(1) - Code of Ethics - Not Applicable to this semi-annual report
11(a)(2) - Certifications - Attached hereto
11(a)(3) - Not Applicable
11(b) - Certifications - 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.
CBA Money Fund
By: /s/ Terry K. Glenn
----------------------------
Terry K. Glenn,
President of
CBA Money Fund
Date: October 18, 2004
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
CBA Money Fund
Date: October 18, 2004
By: /s/ Donald C. Burke
----------------------------
Donald C. Burke,
Chief Financial Officer of
CBA Money Fund
Date: October 18, 2004