N-CSR 1 e603934_ncsr-cmagov.txt 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 811-03205 811-21300 Name of Fund: CMA Government Securities Fund Master Government Securities LLC Fund Address: 100 Bellevue Parkway, Wilmington, DE 19809 Name and address of agent for service: Donald C. Burke, Chief Executive Officer, CMA Government Securities Fund and Master Government Securities LLC, 800 Scudders Mill Road, Plainsboro, NJ 08536. Mailing address: P.O. Box 9011, Princeton, NJ 08543-9011 Registrant's telephone number, including area code: (800) 221-7210 Date of fiscal year end: 03/31/2008 Date of reporting period: 04/01/2007 - 03/31/2008 Item 1 - Report to Stockholders Annual Report March 31, 2008 CMA Government Securities Fund Table of Contents ================================================================================ Page -------------------------------------------------------------------------------- A Letter to Shareholders ................................................. 3 Annual Report: Disclosure of Expenses ................................................... 4 Current Seven-Day Yield .................................................. 4 Fund Financial Statements: Statement of Assets and Liabilities .................................... 5 Statement of Operations ................................................ 5 Statements of Changes in Net Assets .................................... 6 Fund Financial Highlights ................................................ 7 Fund Notes to Financial Statements ....................................... 8 Fund Report of Independent Registered Public Accounting Firm ............. 10 Fund Important Tax Information (Unaudited) ............................... 10 Master LLC Portfolio Summary ............................................. 11 Master LLC Financial Statements: Schedule of Investments ................................................ 12 Statement of Assets and Liabilities .................................... 13 Statement of Operations ................................................ 13 Statements of Changes in Net Assets .................................... 14 Master LLC Financial Highlights .......................................... 14 Master LLC Notes to Financial Statements ................................. 15 Master LLC Report of Independent Registered Public Accounting Firm ....... 17 Officers and Directors ................................................... 18 Additional Information ................................................... 21 2 CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 A Letter to Shareholders Dear Shareholder Financial markets endured severe bouts of volatility during the reporting period, particularly as the calendar turned to 2008. It was then that fears of an economic recession swelled and credit market strains intensified, producing calamity in the financial system and, ultimately, the demise of major Wall Street firm Bear Stearns. The Federal Reserve Board (the "Fed"), after cutting the target federal funds rate 100 basis points (1%) between September 2007 and year-end, stepped up its efforts to support the ailing financial sector in the first three months of 2008. The central bank cut interest rates 125 basis points in January alone, and followed with another 75-basis-point cut on March 18, bringing the target rate to 2.25%. In an unprecedented move, the Fed also extended its financing operations directly to broker/dealers and assisted JPMorgan in its buyout of ill-fated Bear Stearns. Against this backdrop, investor anxiety has been acute and equity markets have struggled. The S&P 500 Index of U.S. stocks was down in March, marking the fifth consecutive month of negative returns. International markets outperformed the U.S. for much of 2007, but that trend changed in more recent months as investors grew increasingly reluctant to take on the risks of foreign investing. In fixed income markets, an ongoing investor flight to quality continued to drive Treasury yields lower and their prices higher. The yield on 10-year Treasury issues, which touched 5.30% in June 2007 (its highest level in five years), fell to 4.04% by year-end and to 3.45% by March 31. Investors largely shunned bonds associated with the housing and credit markets, and the riskier high yield sector landed in negative territory year-to-date. Meanwhile, the municipal bond market has struggled with concerns around the creditworthiness of monoline bond insurers and the failure of auctions for auction rate securities, driving yields higher and prices lower across the curve. At period-end, municipal bonds were trading at higher yields than their Treasury counterparts, a very unusual occurrence by historical standards. Overall, the major benchmark indexes posted mixed results for the current reporting period, generally reflecting heightened investor risk aversion:
Total Returns as of March 31, 2008 6-month 12-month ================================================================================================================ U.S. equities (S&P 500 Index) -12.46% - 5.08% ---------------------------------------------------------------------------------------------------------------- Small cap U.S. equities (Russell 2000 Index) -14.02 -13.00 ---------------------------------------------------------------------------------------------------------------- International equities (MSCI Europe, Australasia, Far East Index) -10.50 - 2.70 ---------------------------------------------------------------------------------------------------------------- Fixed income (Lehman Brothers U.S. Aggregate Index) + 5.23 + 7.67 ---------------------------------------------------------------------------------------------------------------- Tax-exempt fixed income (Lehman Brothers Municipal Bond Index) + 0.75 + 1.90 ---------------------------------------------------------------------------------------------------------------- High yield bonds (Lehman Brothers U.S. Corporate High Yield 2% Issuer Capped Index) - 4.01 - 3.47 ----------------------------------------------------------------------------------------------------------------
Past performance is no guarantee of future results. Index performance shown for illustrative purposes only. You cannot invest directly in an index. As you navigate today's volatile markets, we encourage you to review your investment goals with your financial professional and to make portfolio changes, as needed. For more up-to-date commentary on the economy and financial markets, we invite you to visit www.blackrock.com/funds. As always, we thank you for entrusting BlackRock with your investment assets, and we look forward to continuing to serve you in the months and years ahead. Sincerely, /s/ Rob Kapito Rob Kapito President, BlackRock Advisors, LLC 3 THIS PAGE NOT PART OF YOUR FUND REPORT 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 12b-1 fees, and other Fund expenses. The expense example below (which is based on a hypothetical investment of $1,000 invested on October 1, 2007 and held through March 31, 2008) 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 table 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 table also 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. Expense Example
Actual Hypothetical** --------------------------------------------------- --------------------------------------------------- Beginning Ending Beginning Ending Account Value Account Value Expenses Paid Account Value Account Value Expenses Paid October 1, 2007 March 31, 2008 During the Period* October 1, 2007 March 31, 2008 During the Period* ------------------------------------------------------------------------------------------------------------------------------------ CMA Government Securities Fund ....... $1,000 $1,015.00 $3.31 $1,000 $1,022.01 $3.32 ------------------------------------------------------------------------------------------------------------------------------------
* Expenses are equal to the Fund's annualized expense ratio of 0.65% multiplied by the average account value over the period, multiplied by 185/366 (to reflect the one-half year period shown). Because the Fund is a feeder fund, the expense table example reflects the expenses of both the feeder fund and the master fund in which it invests. ** Hypothetical 5% annual return before expenses is calculated by pro-rating the number of days in the most recent fiscal half year divided by 366. Current Seven-Day Yield As of March 31, 2008 .............................................. 1.28% 4 CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 Statement of Assets and Liabilities March 31, 2008 CMA Government Securities Fund =============================================================================== Assets ------------------------------------------------------------------------------- Investment at value -- Master Government Securities LLC (the "Master LLC"), (cost -- $798,066,504) .................. $798,066,504 Prepaid expenses and other assets ............................. 34,278 ------------ Total assets .................................................. 798,100,782 ------------ =============================================================================== Liabilities ------------------------------------------------------------------------------- Administration fees payable Distribution fees payable ..................................... 100,431 Other affiliates payable ...................................... 5,458 Other accrued expenses payable ................................ 24,988 ------------ Total liabilities ............................................. 297,630 ------------ =============================================================================== Net Assets ------------------------------------------------------------------------------- Net Assets .................................................... $797,803,152 ============ =============================================================================== Net Assets Consist of ------------------------------------------------------------------------------- Shares of beneficial interest, $0.10 par value, unlimited number of shares authorized ................................. $ 79,776,163 Paid-in capital in excess of par .............................. 717,985,464 Accumulated net realized gain allocated from the Master LLC ... 41,525 ------------ Net Assets -- Equivalent to $1.00 per share based on 797,761,629 shares of beneficial interest outstanding ....... $797,803,152 ============ Statement of Operations Year Ended March 31, 2008 CMA Government Securities Fund =============================================================================== Investment Income ------------------------------------------------------------------------------- Interest from affiliates ...................................... $ 35,651 Net investment income allocated from the Master LLC: Interest .................................................... 24,403,074 Expenses .................................................... (1,391,476) ------------ Total income .................................................. 23,047,249 ------------ =============================================================================== Expenses ------------------------------------------------------------------------------- Administration Distribution .................................................. 721,679 Registration .................................................. 135,363 Transfer agent ................................................ 71,717 Printing ...................................................... 36,767 Professional .................................................. 31,892 Miscellaneous ................................................. 10,635 ------------ Total expenses ................................................ 2,461,602 ------------ Net investment income ......................................... 20,585,647 ------------ =============================================================================== Realized and Unrealized Gain (Loss) Allocated from the Master LLC ------------------------------------------------------------------------------- Net realized gain on investments .............................. 40,333 Net change in unrealized appreciation/depreciation on investments .............................................. (317,367) ------------ Total net realized and unrealized loss ........................ (277,034) ------------ Net Increase in Net Assets Resulting from Operations .......... $ 20,308,613 ============ See Notes to Financial Statements. CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 5 Statements of Changes in Net Assets CMA Government Securities Fund
Ended March 31, ----------------------------------- Increase (Decrease) in Net Assets: 2008 2007 =================================================================================================================================== Operations ----------------------------------------------------------------------------------------------------------------------------------- Net investment income ...................................................................... $ 20,585,647 $ 21,186,189 Net realized gain .......................................................................... 40,333 2,167 Net change in unrealized appreciation/depreciation ......................................... (317,367) 167,077 ----------------------------------- Net increase in net assets resulting from operations ....................................... 20,308,613 21,355,433 ----------------------------------- =================================================================================================================================== Dividends and Distributions to Shareholders from ----------------------------------------------------------------------------------------------------------------------------------- Net investment income ...................................................................... (20,585,647) (21,186,189) Net realized gain .......................................................................... -- (975) ----------------------------------- Decrease in net assets resulting from dividends and distributions to shareholders .......... (20,585,647) (21,187,164) ----------------------------------- =================================================================================================================================== Beneficial Interest Transactions ----------------------------------------------------------------------------------------------------------------------------------- Net proceeds from sale of shares ........................................................... 3,558,225,628 2,083,224,270 Value of shares issued to shareholders in reinvestment of dividends and distributions ...... 20,585,274 21,187,472 ----------------------------------- Total shares issued ........................................................................ 3,578,810,902 2,104,411,742 Cost of shares redeemed .................................................................... (3,283,891,056) (2,068,953,714) ----------------------------------- Net increase in net assets derived from beneficial interest transactions ................... 294,919,846 35,458,028 ----------------------------------- =================================================================================================================================== Net Assets ----------------------------------------------------------------------------------------------------------------------------------- Total increase in net assets ............................................................... 294,642,812 35,626,297 Beginning of year .......................................................................... 503,160,340 467,534,043 ----------------------------------- End of year ................................................................................ $ 797,803,152 $ 503,160,340 ===================================
See Notes to Financial Statements. 6 CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 Financial Highlights CMA Government Securities Fund
Ended March 31, ------------------------------------------------------------------------------- 2008 2007 2006 2005 2004 ============================================================================================================================== Per Share Operating Performance ------------------------------------------------------------------------------------------------------------------------------ Net asset value, beginning of year ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------------------------------------------------------------------------------- Net investment income ..................... 0.0369 0.0439 0.0291 0.0102 0.0053 Net realized and unrealized gain (loss) ... (0.0005) 0.0003 0.0001 (0.0010) (0.0003) ------------------------------------------------------------------------------- Net increase from investment operations ... 0.0364 0.0442 0.0292 0.0092 0.0050 ------------------------------------------------------------------------------- Dividends and distributions from: Net investment income .................. (0.0369) (0.0439) (0.0291) (0.0102) (0.0053) Net realized gain ...................... -- -- 1 -- 1 -- 1 (0.0001) ------------------------------------------------------------------------------- Total dividends and distributions ......... (0.0369) (0.0439) (0.0291) (0.0102) (0.0054) ------------------------------------------------------------------------------- Net asset value, end of year .............. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 =============================================================================== ============================================================================================================================== Total Investment Return ------------------------------------------------------------------------------------------------------------------------------ Total investment return ................... 3.74% 4.46% 2.96% 1.03% 0.52% =============================================================================== ============================================================================================================================== Ratios to Average Net Assets 2 ------------------------------------------------------------------------------------------------------------------------------ Total expenses ............................ 0.66% 0.70% 0.67% 0.66% 0.63% =============================================================================== Net investment income and net realized gain 3.53% 4.41% 2.89% 0.98% 0.56% =============================================================================== ============================================================================================================================== Supplemental Data ------------------------------------------------------------------------------------------------------------------------------ Net assets, end of year (000) ............. $ 797,803 $ 503,160 $ 467,534 $ 525,113 $ 652,654 ===============================================================================
1 Amount is less than $(0.0001) per share. 2 Includes the Fund's share of the Master LLC's allocated expenses and/or net investment income and net realized gain. See Notes to Financial Statements. CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 7 Notes to Financial Statements CMA Government Securities Fund 1. Significant Accounting Policies: CMA Government Securities Fund (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a no load, diversified, open-end management investment company. The Fund seeks to achieve its investment objective by investing all of its assets in Master Government Securities LLC (the "Master LLC"), which has the same investment objective and strategies as the Fund. Effective June 15, 2007, the Master LLC was converted from a Delaware statutory trust to a Delaware limited liability company. The value of the Fund's investment in the Master LLC reflects the Fund's proportionate interest in the net assets of the Master LLC. The performance of the Fund is directly affected by the performance of the Master LLC. The financial statements of the Master LLC, including the Schedule of Investments, are included elsewhere in this report and should be read in conjunction with the Fund's financial statements. 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. Actual results may differ from these estimates. The percentage of the Master LLC owned by the Fund at March 31, 2008 was 61.0%. The following is a summary of significant accounting policies followed by the Fund: Valuation of Investments: The Fund records its investment in the Master LLC at fair value. Valuation of securities held by the Master LLC is discussed in Note 1 of the Master LLC's Notes to Financial Statements, which are included elsewhere in this report. Investment Transactions and Net Investment Income: Investment transactions in the Master LLC are accounted for on a trade date basis. The Fund records daily its proportionate share of the Master LLC's income, expenses and realized gains and losses. In addition, the Fund accrues its own income and expenses. Dividends and Distributions to Shareholders: Dividends from net investment income are declared and reinvested daily and paid monthly. Distributions of realized gains, if any, are recorded on the ex-dividend dates. 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. Effective September 28, 2007, the Fund implemented Financial Accounting Standards Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 prescribes the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity, including investment companies, before being measured and recognized in the financial statements. The administrator has evaluated the application of FIN 48 to the Fund, and has determined that the adoption of FIN 48 did not have a material impact on the Fund's financial statements. The Fund files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statute of limitations on the Fund's U.S. federal tax returns remains open for the years ended March 31, 2005 through March 31, 2007. The statutes of limitations on the Fund's state and local tax returns may remain open for an additional year depending upon the jurisdiction. Recent Accounting Pronouncements: In September 2006, Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The impact on the Fund's financial statement disclosures, if any, is currently being assessed. In addition, in February 2007, Statement of Financial Accounting Standards No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("FAS 159"), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. FAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The impact on the Fund's financial statement disclosures, if any, is currently being assessed. In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities -- an amendment of FASB Statement No. 133" ("FAS 161") was issued and is effective for fiscal years beginning after November 15, 2008. FAS 161 is intended to improve financial reporting for derivative instruments by requiring enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity's results of operations and financial position. The administrator is currently evaluating the implications of FAS 161 and the impact on the Fund's financial statement disclosures, if any, is currently being assessed. Other: Expenses directly related to the Fund are charged to the Fund. Other operating expenses shared by several funds are pro-rated among those funds on the basis of relative net assets or other appropriate methods. 8 CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 Notes to Financial Statements (concluded) CMA Government Securities Fund 2. Transactions with Affiliates: The Fund entered into an Administration Agreement with BlackRock Advisors, LLC (the "Administrator"), an indirect, wholly owned subsidiary of BlackRock, Inc., to provide administrative services (other than investment advice and related portfolio activities). For such services, the Fund pays a monthly fee at an annual rate of 0.25% of the Fund's average daily net assets. Merrill Lynch & Co., Inc. ("Merrill Lynch") and The PNC Financial Services Group, Inc. ("PNC") are principal owners of BlackRock, Inc. The Fund has entered into a Distribution Agreement and a Distribution and Shareholder Servicing Plan (the "Distribution Plan") with Merrill Lynch, Pierce, Fenner and Smith Incorporated ("MLPF&S"), a wholly owned subsidiary of Merrill Lynch, and/or affiliates of PNC or Merrill Lynch (including BlackRock, Inc.). Pursuant to the Distribution Plan adopted by the Fund in accordance with Rule 12b-1 under the 1940 Act, the Fund pays MLPF&S a distribution fee. The fee is accrued daily and paid monthly at the annual rate 0.125% of average daily net assets of the Fund for shareholders whose Fund accounts are serviced by MLPF&S or directly with the Fund's transfer agent. Financial Data Services, Inc. ("FDS"), a wholly owned subsidiary of Merrill Lynch and an affiliate of the Administrator, serves as transfer agent. Interest is earned by the Fund from FDS based on the difference, if any, between estimated and actual daily beneficial share activity, which results in uninvested net proceeds from sales of Fund shares. Certain officers and/or directors of the Fund are officers and/or directors of BlackRock, Inc. or its affiliates. 3. Shares of Beneficial Interest: The number of shares sold, reinvested and redeemed during the past two years corresponds to the amounts included in the Statements of Changes in Net Assets for net proceeds from the sale of shares, reinvestment of dividends and distributions and cost of shares redeemed, respectively, since shares are recorded at $1.00 per share. 4. Income Tax Information: The tax character of distributions paid during the fiscal years ended March 31, 2008 and March 31, 2007 was as follows: -------------------------------------------------------------------------------- 3/31/2008 3/31/2007 -------------------------------------------------------------------------------- Distributions paid from: Ordinary income ................................ $20,585,647 $21,187,164 -------------------------- Total taxable distributions ...................... $20,585,647 $21,187,164 ========================== As of March 31, 2008, the components of accumulated earnings on a tax basis were as follows: ------------------------------------------------------------------------------ Undistributed net ordinary income ................................ $ 44,284 Undistributed net long-term capital gains ........................ -- Total undistributed net earnings ................................. 44,284 Net unrealized losses ............................................ (2,759)* Total accumulated net earnings ................................... $ 41,525 * The difference between book-basis and tax-basis net unrealized losses is attributable primarily to the tax deferral of losses on wash sales. CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 9 Report of Independent Registered Public Accounting Firm CMA Government Securities Fund To the Shareholders and Board of Directors of CMA Government Securities Fund: We have audited the accompanying statement of assets and liabilities of CMA Government Securities Fund (the "Fund") as of March 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of CMA Government Securities Fund as of March 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Princeton, New Jersey May 27, 2008 Important Tax Information (Unaudited) The following information is provided with respect to the ordinary income distributions paid by CMA Government Securities Fund for the fiscal year ended March 31, 2008: -------------------------------------------------------------------------------- Federal Obligation Interest -------------------------------------------------------------------------------- Months Paid: April 2007 - March 2008 ........................... 20.98%* -------------------------------------------------------------------------------- Interest-Related Dividends for Non-U.S. Residents -------------------------------------------------------------------------------- Months Paid: April 2007 - December 2007 ........................ 99.84%** January 2008 - March 2008 ......................... 100.00%** -------------------------------------------------------------------------------- * The law varies in each state as to whether and what percentage of dividend income attributable to federal obligations is exempt from state income tax. We recommend that you consult your tax advisor to determine if any portion of the dividends you received is exempt from state income taxes. ** Represents the portion of the taxable ordinary income dividends eligible for exemption from U.S. withholding tax for nonresident aliens and foreign corporations. 10 CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 Portfolio Summary Master Government Securities LLC Portfolio Composition as a Percent of Net Assets 3/31/08 3/31/07 -------------------------------------------------------------------------------- Repurchase Agreements ..................................... 71% 78% U.S. Government Obligations ............................... 33 22 Liabilities in Excess of Other Assets ..................... (4%) -- ------------- Total ..................................................... 100% 100% ============= CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 11 Schedule of Investments March 31, 2008 Master Government Securities LLC (Percentages shown are based on Net Assets) Interest Maturity Par Issue Rate Date (000) Value =============================================================================== U.S. Government Obligations* -- 33.2% =============================================================================== U.S. Treasury Bills 1.25- 3.20% 4/03/2008 $79,597 $ 79,582,921 3.197 4/10/2008 25,000 24,977,799 0.35- 2.40 4/15/2008 60,662 60,624,255 0.35- 2.252 4/17/2008 74,549 74,499,858 2.263 4/24/2008 9,191 9,177,134 2.04- 2.168 5/01/2008 51,526 51,432,839 0.810- 2.20 5/08/2008 60,170 60,074,538 0.98 6/19/2008 25,000 24,945,556 1.30 7/03/2008 50,000 49,835,694 ------------------------------------------------------------------------------- Total U.S. Government Obligations (Cost -- $435,150,594) ........................................ 435,150,594 ------------------------------------------------------------------------------- Issue =============================================================================== Repurchase Agreements** -- 70.4% =============================================================================== Banc of America Securities LLC, purchased on 3/26/2008 to yield 1.50% to 4/02/2008, repurchase price $68,519,979, collateralized by GNMA, 5% - 6.50% due 11/15/2019 to 3/20/2038 ................ 68,500 68,500,000 ------------------------------------------------------------------------------- Barclays Capital Inc., purchased on 3/31/2008 to yield 1.45% to 4/01/2008, repurchase price $66,802,691, collateralized by U.S. Treasury Inflation Bond, 3% - 3.50% due 1/15/2011 to 7/15/2012 ........... 66,800 66,800,000 ------------------------------------------------------------------------------- Citigroup Global Markets Inc., purchased on 3/26/2008 to yield 2% to 4/02/2008, repurchase price $68,526,639, collateralized by GNMA, 6% due 3/20/2038 ......................................... 68,500 68,500,000 ------------------------------------------------------------------------------- Credit Suisse Securities (USA) LLC, purchased on 1/02/2008 to yield 4.10% to 4/01/2008, repurchase price $55,159,650, collateralized by GNMA, 5% - 7% due 7/20/2032 to 2/20/2038 ............................ 54,600 54,600,000 ------------------------------------------------------------------------------- Deutsche Bank Securities Inc., purchased on 3/26/2008 to yield 1.85% to 4/02/2008, repurchase price $68,524,641, collateralized by GNMA, 4.50% - 7% due 1/15/2033 to 3/15/2038 ................. 68,500 68,500,000 ------------------------------------------------------------------------------- Goldman Sachs & Co., Inc., purchased on 1/16/2008 to yield 3.70% to 4/16/2008, repurchase price $56,120,014, collateralized by GNMA, 4.50% - 7.50% due 7/20/2025 to 2/20/2037 ............................ 55,600 55,600,000 ------------------------------------------------------------------------------- Greenwich Capital Markets, Inc., purchased on 3/26/2008 to yield 2.10% to 4/02/2008, repurchase price $68,527,971, collateralized by GNMA, 4.50% - 12% due 8/15/2008 to 3/20/2038 ................ 68,500 68,500,000 ------------------------------------------------------------------------------- HSBC Securities (USA) Inc., purchased on 3/31/2008 to yield 1.45% to 4/01/2008, repurchase price $66,802,691, collateralized by U.S. Treasury Bond, 4.375% due 2/15/2038 .................................. 66,800 66,800,000 ------------------------------------------------------------------------------- J.P. Morgan Securities Inc., purchased on 3/25/2008 to yield 1.75% to 4/01/2008, repurchase price $68,023,139, collateralized by GNMA, 4.50% - 11.50% due 9/15/2008 to 3/20/2038 ............. 68,000 68,000,000 ------------------------------------------------------------------------------- Lehman Brothers Inc., purchased on 3/31/2008 to yield 1.80% to 4/01/2008, repurchase price $66,803,340, collateralized by GNMA, 4% - 9% due 3/15/2013 to 3/15/2038 ............................ 66,800 66,800,000 ------------------------------------------------------------------------------- Merrill Lynch Government Securities Inc., purchased on 3/26/2008 to yield 1.55% to 4/02/2008, repurchase price $68,520,645, collateralized by GNMA, 5.50% - 6% due 6/15/2034 to 9/15/2036 (a) ............. 68,500 68,500,000 ------------------------------------------------------------------------------- Mizuho Securities USA Inc., purchased on 3/31/2008 to yield 1.40% to 4/01/2008, repurchase price $66,802,598, collateralized by U.S. Treasury Bill, due 6/12/2008 to 8/21/2008 ................................ 66,800 66,800,000 ------------------------------------------------------------------------------- Morgan Stanley & Co. Incorporated, purchased on 3/31/2008 to yield 1.35% to 4/01/2008, repurchase price $66,802,505, collateralized by U.S. Treasury STRIPS+, due 2/15/2025 to 5/15/2025 ................... 66,800 66,800,000 ------------------------------------------------------------------------------- UBS Securities LLC, purchased on 3/17/2008 to yield 1.65% to 6/16/2008, repurchase price $66,275,275, collateralized by GNMA, 3.50% - 13% due 6/15/2008 to 9/15/2041 ............................ 66,000 66,000,000 ------------------------------------------------------------------------------- Total Repurchase Agreements (Cost -- $920,700,000) ................................ 920,700,000 ------------------------------------------------------------------------------- Total Investments (Cost -- $1,355,850,594***) -- 103.6% 1,355,850,594 Liabilities in Excess of Other Assets -- (3.6%) ....... (47,728,427) --------------- Net Assets -- 100.0% .................................. $ 1,308,122,167 =============== * U.S. Treasury Bills are traded on a discount basis; the interest rates shown are the range of discount rates paid at the time of purchase by the Master LLC. ** Repurchase Agreements are fully collateralized by U.S. Government Obligations. *** Cost for federal income tax purposes. + Separately Traded Registered Interest and Principal of Securities (STRIPS). (a) Investments in companies considered to be an affiliate of the Master LLC, for purposes of Section 2(a)(3) of the Investment Company Act of 1940, were as follows: -------------------------------------------------------------------------------- Net Interest Affiliate Activity (000) Income -------------------------------------------------------------------------------- Merrill Lynch Government Securities Inc. $19,600 $2,314,618 -------------------------------------------------------------------------------- See Notes to Financial Statements. 12 CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 Statement of Assets and Liabilities March 31, 2008 Master Government Securities LLC =============================================================================== Assets ------------------------------------------------------------------------------- Investments at value -- unaffiliated (cost -- $1,287,350,594) $1,287,350,594 Investments at value -- affiliated (cost -- $68,500,000) ..... 68,500,000 Cash ......................................................... 355 Contributions receivable ..................................... 1,257,792 Interest receivable (including $14,747 from affiliates) ...... 1,129,823 Prepaid expenses ............................................. 23,159 -------------- Total assets ................................................. 1,358,261,723 -------------- =============================================================================== Liabilities ------------------------------------------------------------------------------- Investments purchased payable ................................ 49,835,694 Investment advisory fees payable ............................. 212,879 Other affiliates payable ..................................... 10,083 Other accrued expenses payable ............................... 80,900 -------------- Total liabilities ............................................ 50,139,556 -------------- =============================================================================== Net Assets ------------------------------------------------------------------------------- Net Assets ................................................... $1,308,122,167 ============== =============================================================================== Net Assets Consist of ------------------------------------------------------------------------------- Investors' capital ........................................... $1,308,122,167 ============== Statement of Operations Year Ended March 31, 2008 Master Government Securities LLC =============================================================================== Investment Income ------------------------------------------------------------------------------- Interest (includes $2,314,618 from affiliates) ............... $ 45,070,275 =============================================================================== Expenses ------------------------------------------------------------------------------- Investment advisory .......................................... 2,194,232 Accounting services .......................................... 184,349 Custodian .................................................... 59,202 Professional ................................................. 51,220 Directors .................................................... 30,271 Printing ..................................................... 576 Miscellaneous 27,556 -------------- Total expenses ............................................... 2,547,406 -------------- Net investment income ........................................ 42,522,869 -------------- =============================================================================== Realized and Unrealized Gain (Loss) ------------------------------------------------------------------------------- Net realized gain on investments ............................. 71,881 Net change in unrealized appreciation/depreciation investments .................................................. (27,831) -------------- Total realized and unrealized gain ........................... 44,050 -------------- Net Increase in Net Assets Resulting from Operations ......... $ 42,566,919 ============== See Notes to Financial Statements. CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 13 Statements of Changes in Net Assets Master Government Securities LLC
Ended March 31, ----------------------------------- Increase (Decrease) in Net Assets: 2008 2007 =================================================================================================================================== Operations ----------------------------------------------------------------------------------------------------------------------------------- Net investment income ...................................................................... $ 42,522,869 $ 45,035,528 Net realized gain .......................................................................... 71,881 4,743 Net change in unrealized appreciation/depreciation ......................................... (27,831) 319,061 ----------------------------------- Net increase in net assets resulting from operations ....................................... 42,566,919 45,359,332 ----------------------------------- =================================================================================================================================== Capital Transactions ----------------------------------------------------------------------------------------------------------------------------------- Proceeds from contributions ................................................................ 6,967,978,832 5,153,023,736 Fair value of withdrawals .................................................................. (6,666,836,245) (5,202,779,172) ----------------------------------- Net increase (decrease) in net assets derived from capital transactions .................... 301,142,587 (49,755,436) ----------------------------------- =================================================================================================================================== Net Assets ----------------------------------------------------------------------------------------------------------------------------------- Total increase (decrease) in net assets .................................................... 343,709,506 (4,396,104) Beginning of year .......................................................................... 964,412,661 968,808,765 ----------------------------------- End of year ................................................................................ $ 1,308,122,167 $ 964,412,661 ===================================
Financial Highlights Master Government Securities LLC
Year Ended March 31, ---------------------------------------------------------------------------- 2008 2007 2006 2005 2004 =================================================================================================================================== Total Investment Return ----------------------------------------------------------------------------------------------------------------------------------- Total investment return ........................... 4.16% 4.90% 3.37% 1.44% 0.94% ============================================================================ =================================================================================================================================== Ratios to Average Net Assets ----------------------------------------------------------------------------------------------------------------------------------- Total expenses .................................... 0.24% 0.26% 0.26% 0.25% 0.22% ============================================================================ Net investment income and net realized gain ....... 3.99% 4.84% 3.31% 1.39% 0.94% ============================================================================ =================================================================================================================================== Supplemental Data ----------------------------------------------------------------------------------------------------------------------------------- Net assets, end of year (000) ..................... $ 1,308,122 $ 964,413 $ 968,809 $ 936,566 $ 1,194,238 ============================================================================
See Notes to Financial Statements. 14 CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 Notes to Financial Statements Master Government Securities LLC 1. Significant Accounting Policies: Master Government Securities LLC (the "Master LLC") is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), and is organized as a Delaware limited liability company. Prior to June 15, 2007, the Master LLC was organized as a Delaware statutory trust (the "Trust"). The Limited Liability Company Agreement permitted the Directors (and prior to June 15, 2007, the Declaration of Trust permitted the Trustees) to issue non-transferable interests in the Master LLC/Trust, subject to certain limitations. Throughout this report, the Trust and the Master LLC are referred to as the Master LLC and the Board of Trustees is referred to as the Board of Directors. The Master LLC'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. Actual results may differ from these estimates. The following is a summary of significant accounting policies followed by the Master LLC: Valuation of Investments: The Master LLC securities are valued under the amortized cost method which approximates current market value in accordance with Rule 2a-7 of the 1940 Act. Under this method, securities are valued at cost when purchased and thereafter, a constant proportionate amortization of any discount or premium is recorded until the maturity of the security. Regular review and monitoring of the valuation is performed in an attempt to avoid dilution or other unfair results to investors. Repurchase Agreements: The Master LLC may invest in U.S. government and agency securities pursuant to repurchase agreements. Under such agreements, the counterparty agrees to repurchase the security at a mutually agreed upon time and price. The counterparty will be required on a daily basis to maintain the value of the securities subject to the agreement at no less than the repurchase price. The agreements are conditioned upon the collateral being deposited under the Federal Reserve book entry system or held in a segregated account by the Master LLC's custodian. If the counterparty defaults and the fair value of the collateral declines, liquidation of the collateral by the Master LLC may be delayed or limited. Income Taxes: The Master LLC is classified as a partnership for federal income tax purposes. As such, each investor in the Master LLC is treated as owner of its proportionate share of the net assets, income, expenses and realized gains and losses of the Master LLC. Therefore, no federal income tax provision is required. It is intended that the Master LLC's assets will be managed so an investor in the Master LLC can satisfy the requirements of Subchapter M of the Internal Revenue Code. Effective September 28, 2007, the Master LLC implemented Financial Accounting Standards Board ("FASB") Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 prescribes the minimum recognition threshold a tax position must meet in connection with accounting for uncertainties in income tax positions taken or expected to be taken by an entity, including investment companies, before being measured and recognized in the financial statements. BlackRock Advisors, LLC (the "Advisor"), an indirect, wholly owned subsidiary of BlackRock, Inc., has evaluated the application of FIN 48 to the Master LLC, and has determined that the adoption of FIN 48 did not have a material impact on the Master LLC's financial statements. The Master LLC files U.S. federal and various state and local tax returns. No income tax returns are currently under examination. The statutes of limitations on the Master LLC's U.S. federal tax returns remains open for the years ended March 31, 2005 through March 31, 2007. The statutes of limitations on the Master LLC's state and local tax returns may remain open for an additional year depending upon the jurisdiction. Investment Transactions and Investment Income: Investment 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 is recognized on the accrual basis. The Master LLC amortizes all premiums and discounts on debt securities. Recent Accounting Pronouncements: In September 2006, Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" ("FAS 157"), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. The impact on the Master LLC's financial statement disclosures, if any, is currently being assessed. In addition, in February 2007, Statement of Financial Accounting Standards No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("FAS 159"), was issued and is effective for fiscal years beginning after November 15, 2007. FAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. FAS 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The impact on the Master LLC's financial statement disclosures, if any, is currently being assessed. In March 2008, Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities -- an amendment of FASB Statement No. 133" ("FAS 161") was issued and is effective for fiscal years beginning after November 15, 2008. FAS 161 is intended to improve financial reporting for derivative instruments by requiring enhanced disclosure that enables investors to understand how and why an entity uses derivatives, how derivatives are accounted for, and how derivative instruments affect an entity's results of operations and financial position. Management is currently evaluating the implications of CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 15 Notes to Financial Statements (concluded) Master Government Securities LLC FAS 161 and the impact on the Master LLC's financial statement disclosures, if any, is currently being assessed. Other: Expenses directly related to the Master LLC are charged to the Master LLC. Other operating expenses shared by several funds are pro-rated among those funds on the basis of relative net assets or other appropriate methods. 2. Investment Advisory Agreement and Other Transactions with Affiliates: The Master LLC entered into an Investment Advisory Agreement with the Advisor to provide investment advisory and administration services. Merrill Lynch & Co., Inc. ("Merrill Lynch") and The PNC Financial Services Group, Inc. are principal owners of BlackRock, Inc. The Advisor is responsible for the management of the Master LLC's portfolio and provides the necessary personnel, facilities and equipment to provide such services to the Master LLC. The Advisor also performs certain administrative services necessary for the operation of the Master LLC. For such services, the Master LLC pays a monthly fee based upon the average daily value of the Master LLC's net assets at the following annual rates: 0.25% of the Master LLC's average daily net assets not exceeding $500 million; 0.175% of the average daily net assets in excess of $500 million, but not exceeding $1 billion; and 0.125% of the average daily net assets in excess of $1 billion. In addition, the Advisor has entered into a separate sub-advisory agreement with BlackRock Institutional Management Corporation ("BIMC"), an affiliate of the Advisor, under which the Advisor pays BIMC for services it provides, a monthly fee that is a percentage of the investment advisory fee paid by the Master LLC to the Advisor. For the year ended March 31, 2008, the Master LLC reimbursed the Advisor $19,232 for certain accounting services, which is included in accounting services expenses in the Statement of Operations. Certain officers and/or directors of the Master LLC are officers and/or directors of BlackRock, Inc. or its affiliates. 16 CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 Report of Independent Registered Public Accounting Firm Master Government Securities LLC To the Investors and Board of Directors of Master Government Securities LLC: We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Master Government Securities LLC (the "Master LLC") (formerly Master Government Securities Trust) as of March 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Master LLC's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Master LLC is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Master LLC's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of March 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Master Government Securities LLC as of March 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Princeton, New Jersey May 27, 2008 CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 17 Officers and Directors
Number of Position(s) Length of BlackRock- Held with Time Served Advised Funds Name, Address Fund/ as a Principal Occupation(s) During and Portfolios Public and Year of Birth Master LLC Director** Past Five Years Overseen Directorships ==================================================================================================================================== Non-Interested Directors* ------------------------------------------------------------------------------------------------------------------------------------ David O. Beim Director Since 2007 Professor of Finance and Economics at 35 Funds None 40 East 52nd Street the Columbia University Graduate 81 Portfolios New York, NY 10022 School of Business since 1991; 1940 Trustee, Phillips Exeter Academy since 2002; Formerly Chairman, Wave Hill, Inc. (public garden and cultural center) from 1990 to 2006. ------------------------------------------------------------------------------------------------------------------------------------ Ronald W. Forbes Director and Since Professor Emeritus of Finance, School 35 Funds None 40 East 52nd Street Co-Chair 1981/2002 of Business, State University of New 81 Portfolios New York, NY 10022 of the Board York at Albany since 2000. 1940 of Directors ------------------------------------------------------------------------------------------------------------------------------------ Dr. Matina Horner Director Since 2007 Formerly Executive Vice President of 35 Funds NSTAR (electric 40 East 52nd Street Teachers Insurance and Annuity 81 Portfolios and gas utility) New York, NY 10022 Association and College Retirement 1939 Equities Fund from 1989 to 2003. ------------------------------------------------------------------------------------------------------------------------------------ Rodney D. Johnson Director and Since 2007 President, Fairmount Capital Advisors, 35 Funds None 40 East 52nd Street Co-Chair Inc. since 1987; Director, Fox Chase 81 Portfolios New York, NY 10022 of the Board Cancer Center since 2002; Member of 1941 of Directors the Archdiocesan Investment Committee of the Archdiocese of Philadelphia since 2003; Director, the Committee of Seventy (civic) since 2006. ------------------------------------------------------------------------------------------------------------------------------------ Herbert I. London Director and Since 2007 Professor Emeritus, New York 35 Funds AIMS Worldwide, Inc. 40 East 52nd Street Member of University since 2005; John M. Olin 81 Portfolios (marketing) New York, NY 10022 the Audit Professor of Humanities, New York 1939 Committee University from 1993 to 2005 and Professor thereof from 1980 to 2005; President, Hudson Institute (policy research organization) since 1997 and Trustee thereof since 1980; Chairman of the Board of Trustees for Grantham University since 2006; Director of InnoCentive, Inc. (strategic solutions company) since 2005; Director of Cerego, LLC (software development and design) since 2005. ------------------------------------------------------------------------------------------------------------------------------------ Cynthia A. Montgomery Director Since 1994/ Professor, Harvard Business School 35 Funds Newell Rubbermaid, 40 East 52nd Street 2002 since 1989; Director, Harvard Business 81 Portfolios Inc. (manufacturing) New York, NY 10022 School Publishing since 2005; 1952 Director, McLean Hospital since 2005. ------------------------------------------------------------------------------------------------------------------------------------ Joseph P. Platt, Jr. Director Since 2007 Director, The West Penn Allegheny 35 Funds Greenlight Capital 40 East 52nd Street Health System (a not-for-profit health 81 Portfolios Re, Ltd. New York, NY 10022 system) since 2008; Partner, Amarna (reinsurance 1947 Corporation, LLC (private investment company) company) since 2002; Director, WQED Multimedia (PBS and Multimedia, a not-for-profit company) since 2002; Director, Jones and Brown (Canadian insurance broker) since 1998; General Partner, Thorn Partner, LP (private investment) since 1998. ------------------------------------------------------------------------------------------------------------------------------------ Robert C. Robb, Jr. Director Since 2007 Partner, Lewis, Eckert, Robb and 35 Funds None 40 East 52nd Street Company (management and financial 81 Portfolios New York, NY 10022 consulting firm) since 1981. 1945 ------------------------------------------------------------------------------------------------------------------------------------
18 CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 Officers and Directors (continued)
Number of Position(s) Length of BlackRock- Held with Time Served Advised Funds Name, Address Fund/ as a Principal Occupation(s) During and Portfolios Public and Year of Birth Master LLC Director** Past Five Years Overseen Directorships ==================================================================================================================================== Non-Interested Directors* (concluded) ------------------------------------------------------------------------------------------------------------------------------------ Toby Rosenblatt Director Since 2007 President, Founders Investments Ltd. 35 Funds A.P. Pharma, Inc. 40 East 52nd Street (private investments) since 1999; 81 Portfolios (speciality New York, NY 10022 Director of Forward Management, LLC pharmaceuticals) 1938 since 2007; Director, The James Irvine Foundation (philanthropic foundation) since 1997; Formerly Trustee, State Street Research Mutual Funds from 1990 to 2005; Formerly, Trustee, Metropolitan Series Funds, Inc. from 2001 to 2005. ------------------------------------------------------------------------------------------------------------------------------------ Kenneth L. Urish Director and Since 2007 Managing Partner, Urish Popeck & Co., 35 Funds None 40 East 52nd Street Chair of LLC (certified public account- ants 81 Portfolios New York, NY 10022 the Audit and consultants) since 1976; Member of 1951 Committee External Advisory Board, The Pennsylvania State University Accounting Department since 2001; Trustee, The Holy Family Foundation since 2001; Committee Member/Professional Ethics Committee of the Pennsylvania Institute of Certified Public Accountants since 2007; President and Trustee, Pittsburgh Catholic Publishing Associates since 2003; Formerly Director, Inter-Tel from 2006 to 2007. ------------------------------------------------------------------------------------------------------------------------------------ Frederick W. Winter Director and Since 2007 Professor and Dean Emeritus of the 35 Funds None 40 East 52nd Street Member of Joseph M. Katz School of Business, 81 Portfolios New York, NY 10022 the Audit University of Pittsburgh since 2005 1945 Committee and Dean thereof from 1997 to 2005. Director, Alkon Corporation (pneumatics) since 1992; Director, Indotronix International (IT services) since 2004; Director, Tippman Sports (recreation) since 2005. -------------------------------------------------------------------------------------------------------- * Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. ** Following the combination of Merrill Lynch Investment Managers, L.P. ("MLIM") and BlackRock, Inc. ("BlackRock") in September 2006, the various legacy MLIM and legacy BlackRock Fund boards were realigned and consolidated into three new Fund boards in 2007. As a result, although the chart shows certain directors as joining the Fund's/Master LLC's board in 2007, those directors first became a member of the board of directors of other legacy MLIM or legacy BlackRock Funds as follows: David O. Beim since 1998; Ronald W. Forbes since 1977; Matina Horner since 2004; Rodney D. Johnson since 1995; Herbert I. London since 1987; Cynthia A. Montgomery since 1994; Joseph P. Platt since 1999; Robert C. Robb, Jr. since 1999; Toby Rosenblatt since 2005; Kenneth L. Urish since 1999 and Frederick W. Winter since 1999. ==================================================================================================================================== Interested Directors* ------------------------------------------------------------------------------------------------------------------------------------ Richard S. Davis Director Since 2007 Managing Director, BlackRock, Inc. 185 Funds None 40 East 52nd Street since 2005; Formerly Chief Executive 292 Portfolios New York, NY 10022 Officer, State Street Research & 1945 Management Company from 2000 to 2005; Formerly Chairman of the Board of Trustees, State Street Research Mutual Funds from 2000 to 2005; Formerly Chairman, SSR Realty from 2000 to 2004. ------------------------------------------------------------------------------------------------------------------------------------ Henry Gabbay Director Since 2007 Consultant, BlackRock, Inc. since 184 Funds None 40 East 52nd Street 2007; Formerly Managing Director, 291 Portfolios New York, NY 10022 BlackRock, Inc. from 1989 to 2007; 1947 Formerly Chief Administrative Officer, BlackRock Advisors, LLC from 1998 to 2007; Formerly President of BlackRock Funds and BlackRock Bond Allocation Target Shares from 2005 to 2007 and Treasurer of certain closed-end funds in the BlackRock fund complex from 1989 to 2006. -------------------------------------------------------------------------------------------------------- * Messrs. Davis and Gabbay are both "interested persons," as defined in the Investment Company Act of 1940, of the Fund/Master LLC based on their positions with BlackRock, Inc. and its affiliates. Directors serve until their resignation, removal or death, or until December 31 of the year in which they turn 72. ------------------------------------------------------------------------------------------------------------------------------------
CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 19 Officers and Directors (concluded)
Position(s) Held with Name, Address Fund/ Length of and Year of Birth Master LLC Time Served Principal Occupation(s) During Past Five Years ==================================================================================================================================== Fund/Master LLC's Officers* ------------------------------------------------------------------------------------------------------------------------------------ Donald C. Burke Fund Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Managing Director 40 East 52nd Street President of Merrill Lynch Investment Managers, L.P. ("MLIM") and Fund Asset New York, NY 10022 and Chief Management, L.P. ("FAM") in 2006; First Vice President thereof from 1997 to 1960 Executive 2005; Treasurer thereof from 1999 to 2006 and Vice President thereof from Officer 1990 to 1997. ------------------------------------------------------------------------------------------------------------------------------------ Anne F. Ackerley Vice Since 2007 Managing Director of BlackRock, Inc. since 2000 and First Vice President and 40 East 52nd Street President Chief Operating Officer of Mergers and Acquisitions Group from 1997 to 2000; New York, NY 10022 First Vice President and Chief Operating Officer of Public Finance Group 1962 thereof from 1995 to 1997; First Vice President of Emerging Markets Fixed Income Research of Merrill Lynch & Co., Inc. from 1994 to 1995. ------------------------------------------------------------------------------------------------------------------------------------ Neal J. Andrews Chief Since 2007 Managing Director of BlackRock, Inc. since 2006; Formerly Senior Vice 40 East 52nd Street Financial President and Line of Business Head of Fund Accounting and Administration at New York, NY 10022 Officer PFPC Inc. from 1992 to 2006. 1966 ------------------------------------------------------------------------------------------------------------------------------------ Jay M. Fife Treasurer Since 2007 Managing Director of BlackRock, Inc. since 2007 and Director in 2006; 40 East 52nd Street Formerly Assistant Treasurer of the MLIM/FAM advised funds from 2005 to New York, NY 10022 2006; Director of MLIM Fund Services Group from 2001 to 2006. 1970 ------------------------------------------------------------------------------------------------------------------------------------ Brian P. Kindelan Chief Since 2007 Chief Compliance Officer of the Funds since 2007; Anti-Money Laundering 40 East 52nd Street Compliance Officer of the Funds since 2007; Managing Director and Senior Counsel New York, NY 10022 Officer of thereof since 2005; Director and Senior Counsel of BlackRock Advisors, Inc. 1959 the Funds 2001 to 2004 and Vice President and Senior Counsel thereof from 1998 to 2000; Senior Counsel of The PNC Bank Corp. from 1995 to 1998. ------------------------------------------------------------------------------------------------------------------------------------ Howard Surloff Secretary Since 2007 Managing Director of BlackRock, Inc. and General Counsel of U.S. Funds at 40 East 52nd Street BlackRock, Inc. since 2006; Formerly General Counsel (U.S.) of Goldman Sachs New York, NY 10022 Asset Management, L.P. from 1993 to 2006. 1965 -------------------------------------------------------------------------------------------------------- * Officers of the Fund/Master LLC serve at the pleasure of the Board of Directors. ------------------------------------------------------------------------------------------------------------------------------------ Further information about the Fund's/Master LLC's Officers and Directors is available in the Fund's/Master LLC's Statement of Additional Information, which can be obtained without charge by calling (800) 441-7762. ------------------------------------------------------------------------------------------------------------------------------------
Custodian State Street Bank and Trust Company Boston, MA 02101 Transfer Agent Financial Data Services, Inc. Jacksonville, FL 32246 Accounting Agent State Street Bank and Trust Company Princeton, NJ 08540 Independent Registered Public Accounting Firm Deloitte & Touche LLP Princeton, NJ 08540 Legal Counsel Sidley Austin LLP New York, NY 10019 20 CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 Additional Information 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 website at http://www.sec.gov and 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 (800) SEC-0330. The Fund's Forms N-Q may also be obtained upon request and without charge by calling (800) 441-7712. Electronic Delivery Electronic copies of most financial reports and prospectuses are available on the Fund's website or shareholders can sign up for e-mail notifications of quarterly statements, annual and semi-annual reports and prospectuses by enrolling in the Fund's electronic delivery program. Shareholders Who Hold Accounts with Investment Advisors, Banks or Brokerages: Please contact your financial advisor to enroll. Please note that not all investment advisors, banks or brokerages may offer this service. General Information The Fund will mail only one copy of shareholder documents, including annual and semi-annual reports and proxy statements, to shareholders with multiple accounts at the same address. This practice is commonly called "householding" and it is intended to reduce expenses and eliminate duplicate mailings of shareholder documents. Mailings of your shareholder documents may be householded indefinitely unless you instruct us otherwise. If you do not want the mailing of these documents to be combined with those for other members of your household, please contact the Fund at (800) 441-7762. CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 21 Additional Information (concluded) BlackRock Privacy Principles BlackRock is committed to maintaining the privacy of its current and former fund investors and individual clients (collectively, "Clients") and to safeguarding their non-public personal information. The following information is provided to help you understand what personal information BlackRock collects, how we protect that information and why in certain cases we share such information with select parties. If you are located in a jurisdiction where specific laws, rules or regulations require BlackRock to provide you with additional or different privacy-related rights beyond what is set forth below, then BlackRock will comply with those specific laws, rules or regulations. BlackRock obtains or verifies personal non-public information from and about you from different sources, including the following: (i) information we receive from you or, if applicable, your financial intermediary, on applications, forms or other documents; (ii) information about your transactions with us, our affiliates, or others; (iii) information we receive from a consumer reporting agency; and (iv) from visits to our websites. BlackRock does not sell or disclose to non-affiliated third parties any non-public personal information about its Clients, except as permitted by law or as is necessary to respond to regulatory requests or to service Client accounts. These non-affiliated third parties are required to protect the confidentiality and security of this information and to use it only for its intended purpose. We may share information with our affiliates to service your account or to provide you with information about other BlackRock products or services that may be of interest to you. In addition, BlackRock restricts access to non-public personal information about its Clients to those BlackRock employees with a legitimate business need for the information. BlackRock maintains physical, electronic and procedural safeguards that are designed to protect the non-public personal information of its Clients, including procedures relating to the proper storage and disposal of such information. 22 CMA GOVERNMENT SECURITIES FUND MARCH 31, 2008 This report is transmitted to shareholders only. It 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. Total return information assumes reinvestment of all distributions. For current month-end performance information, call (800) 882-0052. The Fund's current 7-day yield more closely reflects the current earnings of the Fund than the total returns quoted. 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 (800) 441-7762; (2) at www.blackrock.com; and (3) on the Securities and Exchange Commission's website 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.blackrock.com or by calling (800) 441-7762 and (2) on the Securities and Exchange Commission's website at http://www.sec.gov. CMA Government Securities Fund 100 Bellevue Parkway Wilmington, DE 19809 #11212 -- 3/08 Item 2 - Code of Ethics - The registrant (or the "Fund") has adopted a code of ethics, as of the end of the period covered by this report, applicable to the registrant's principal executive officer, principal financial officer and principal accounting officer, or persons performing similar functions. During the period covered by this report, there have been no amendments to or waivers granted under the code of ethics. A copy of the code of ethics is available without charge at www.blackrock.com. Item 3 - Audit Committee Financial Expert - The registrant's board of directors or trustees, as applicable (the "board of directors") has determined that (i) the registrant has the following audit committee financial experts serving on its audit committee and (ii) each audit committee financial expert is independent: Ronald W. Forbes (not reappointed to audit committee, effective November 1, 2007) Kenneth L. Urish (term began, effective November 1, 2007) Richard R. West (term ended, effective November 1, 2007) Under applicable securities laws, a person determined to be an audit committee financial expert will not be deemed an "expert" for any purpose, including without limitation for the purposes of Section 11 of the Securities Act of 1933, as a result of being designated or identified as an audit committee financial expert. The designation or identification as an audit committee financial expert does not impose on such person any duties, obligations, or liabilities greater than the duties, obligations, and liabilities imposed on such person as a member of the audit committee and board of directors in the absence of such designation or identification. Item 4 - Principal Accountant Fees and Services
---------------------------------------------------------------------------------------------------------------------------------- (a) Audit Fees (b) Audit-Related Fees(1) (c) Tax Fees(2) (d) All Other Fees(3) ---------------------------------------------------------------------------------------------------------------------------------- Current Previous Current Previous Current Previous Current Previous Fiscal Year Fiscal Fiscal Year Fiscal Fiscal Year Fiscal Fiscal Year Fiscal Entity Name End Year End End Year End End Year End End Year End ---------------------------------------------------------------------------------------------------------------------------------- Master Government $24,300 $28,500 $0 $0 $9,200 $9,200 $0 $0 Securities LLC ---------------------------------------------------------------------------------------------------------------------------------- CMA Government Securities Fund $6,800 $6,600 $0 $0 $6,100 $6,100 $749 $0 ----------------------------------------------------------------------------------------------------------------------------------
1 The nature of the services include assurance and related services reasonably related to the performance of the audit of financial statements not included in Audit Fees. 2 The nature of the services include tax compliance, tax advice and tax planning. 3 The nature of the services include a review of compliance procedures and attestation thereto. (e)(1) Audit Committee Pre-Approval Policies and Procedures: The registrant's audit committee (the "Committee") has adopted policies and procedures with regard to the pre-approval of services. Audit, audit-related and tax compliance services provided to the registrant on an annual basis require specific pre-approval by the Committee. The Committee also must approve other non-audit services provided to the registrant and those non-audit services provided to the registrant's affiliated service providers that relate directly to the operations and the financial reporting of the registrant. Certain of these non-audit services that the Committee believes are a) consistent with the SEC's auditor independence rules and b) routine and recurring services that will not impair the independence of the independent accountants may be approved by the Committee without consideration on a specific case-by-case basis ("general pre-approval"). The term of any general pre-approval is 12 months from the date of the pre-approval, unless the Committee provides for a different period. Tax or other non-audit services provided to the registrant which have a direct impact on the operation or financial reporting of the registrant will only be deemed pre-approved provided that any individual project does not exceed $10,000 attributable to the registrant or $50,000 for all of the registrants the Committee oversees. For this purpose, multiple projects will be aggregated to determine if they exceed the previously mentioned cost levels. Any proposed services exceeding the pre-approved cost levels will require specific pre-approval by the Committee, as will any other services not subject to general pre-approval (e.g., unanticipated but permissible services). The Committee is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. At this meeting, an analysis of such services is presented to the Committee for ratification. The Committee may delegate to one or more of its members the authority to approve the provision of and fees for any specific engagement of permitted non-audit services, including services exceeding pre-approved cost levels. (e)(2) None of the services described in each of Items 4(b) through (d) were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. (f) Not Applicable (g) Affiliates' Aggregate Non-Audit Fees: -------------------------------------------------------------------- Current Fiscal Previous Fiscal Entity Name Year End Year End -------------------------------------------------------------------- Master Government Securities LLC $287,500 $3,023,700 -------------------------------------------------------------------- CMA Government Securities Fund $288,549 $3,020,600 -------------------------------------------------------------------- (h) The registrant's audit committee has considered and determined that the provision of non-audit services that were rendered to the registrant's investment adviser (not including any non-affiliated sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by the registrant's 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. Regulation S-X Rule 2-01(c)(7)(ii) - $287,500, 0% Item 5 - Audit Committee of Listed Registrants - Not Applicable Item 6 - Investments (a) The registrant's Schedule of Investments is included as part of the Report to Stockholders filed under Item 1 of this form. (b) Not Applicable due to no such divestments during the semi-annual period covered since the previous Form N-CSR filing. Item 7 - Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies - Not Applicable Item 8 - Portfolio Managers of Closed-End Management Investment Companies - Not Applicable Item 9 - Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers - Not Applicable Item 10 - Submission of Matters to a Vote of Security Holders - The registrant's Nominating and Governance Committee will consider nominees to the Board recommended by shareholders when a vacancy becomes available. Shareholders who wish to recommend a nominee should send nominations which include biographical information and set forth the qualifications of the proposed nominee to the registrant's Secretary. There have been no material changes to these procedures. Item 11 - Controls and Procedures 11(a) - The registrant's principal executive and principal financial officers or persons performing similar functions have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act")) are effective as of a date within 90 days of the filing of this report based on the evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act and Rule 15d-15(b) under the Securities Exchange Act of 1934, as amended. 11(b) - There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act) that occurred during the second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12 - Exhibits attached hereto 12(a)(1) - Code of Ethics - See Item 2 12(a)(2) - Certifications - Attached hereto 12(a)(3) - Not Applicable 12(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. CMA Government Securities Fund and Master Government Securities LLC By: /s/ Donald C. Burke ----------------------------------- Donald C. Burke Chief Executive Officer of CMA Government Securities Fund and Master Government Securities LLC Date: May 22, 2008 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/ Donald C. Burke ----------------------------------- Donald C. Burke Chief Executive Officer (principal executive officer) of CMA Government Securities Fund and Master Government Securities LLC Date: May 22, 2008 By: /s/ Neal J. Andrews ----------------------------------- Neal J. Andrews Chief Financial Officer (principal financial officer) of CMA Government Securities Fund and Master Government Securities LLC Date: May 22, 2008