CMA
CMA TAX-EXEMPT FUND
Annual Report
March 31, 1994
Merrill Lynch BULL LOGO
Officers and Trustees
Arthur Zeikel--President and Trustee
Ronald W. Forbes--Trustee
Cynthia A. Montgomery--Trustee
Charles C. Reilly--Trustee
Kevin A. Ryan--Trustee
Richard R. West--Trustee
Terry K. Glenn--Executive Vice President
Vincent R. Giordano--Senior Vice President
Donald C. Burke--Vice President
Peter J. Hayes--Vice President
Kenneth A. Jacob--Vice President
Helen Marie Sheehan--Vice President
Gerald M. Richard--Treasurer
Robert Harris--Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 1713
Boston, Massachusetts 02101
Transfer Agent
Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, Florida 32246-6484
(800) 221-7210*
[FN]
*For inquiries regarding your CMA account,
call (800) CMA-INFO [(800) 262-4636].
<PAGE>
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. Past performance results
shown in this report should not be considered a rep-
resentation of future performance, which will fluc-
tuate. The Fund seeks to maintain a consistent
$1.00 net asset value per share, although this can-
not be assured. An investment in the Fund is neither
insured nor guaranteed by the US Government.
CMA Tax-Exempt Fund
Box 9011
Princeton, NJ 08543-9011
TO OUR SHAREHOLDERS:
For the year ended March 31, 1994, CMA Tax-Exempt Fund paid
shareholders a net annualized yield of 1.96%*. As of March 31,
1994, the Fund's 7-day yield was 1.80%.
The Environment
Inflationary expectations changed sharply during the March
quarter. Following better-than-expected economic results, Federal
Reserve Board Chairman Alan Greenspan indicated in Congressional
testimony in January that continued strong expansion of the
economy would lead the central bank to tighten monetary policy in
an effort to control inflation. On February 4, 1994, the central
bank broke with tradition and publicly announced a modest 25
basis point (0.25%) increase in short-term interest rates. At the
March 22 meeting of the Federal Open Market Committee, the
Federal Reserve Board again raised the Federal Funds rate by 25
basis points and announced the increase.
Rather than view the Federal Reserve Board's first tightening
move as a preemptive strike against inflation, fixed-income
investors focused on Chairman Greenspan's implicit promise of
further tightening should the rate of inflation accelerate, and
bond prices declined sharply. The setback in the bond market was
also reflected in greater stock market volatility. While the
second increase in the Federal Funds rate was less of a surprise,
investors remained concerned that interest rates would trend
upward sharply. As a result, stock and bond prices continued to
decline through the end of March. The volatility in the US
capital markets was mirrored in international markets. Political
and economic developments, along with concerns of heightened
global inflationary pressures, led to a sell-off in most capital
markets, especially the emerging markets that had appreciated
strongly in 1993.
<PAGE>
In the weeks ahead, investors will continue to gauge the pace of
the economic expansion and watch for signs of an overheating
economy. At this time, there is little evidence that the rate of
inflation will increase rapidly. Therefore, although the secular
long-term trend toward lower interest rates may be over, it is
not yet certain whether the pace of economic activity will
accelerate to the point where significant Federal Reserve Board
tightening will be necessary to contain inflation.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
Investment Outlook and Strategy
Despite the dramatic rise in interest rates which occurred in the
taxable bond market, interest rates on short-term tax-exempt
securities closed the period essentially unchanged. Interest
rates in the short-term municipal market have been driven by
supply and demand factors. This is best illustrated by the growth
in assets of the tax-exempt money fund industry as compared to
new-issue supply for the period. Overall, for the period ended
March 31, 1994, industry assets grew approximately $16.0 billion,
to $116.2 billion from $100.7 billion on October 1, 1993. This
demand was the result of both the traditional "January effect"
whereby there are huge inflows of cash from dividend reinvest-
ment, bond calls and defeasance, as well as from investors seek-
ing refuge from falling stock and bond prices in February and
March. Additionally, new-issue supply for the period was $16.2
billion, a 57% decrease from the $37.7 billion which came to
market in the September period. Although interest rates on six-
month municipal notes fell 70 basis points--80 basis points
(0.70%--0.80%) by early January, they began to rise somewhat in
February as demand slackened and the market reacted to a tighter
Federal Reserve Board monetary policy. Subsequently, these in-
terest rates closed the period essentially unchanged, at approx-
imately 2.70%.
This performance by the short-term municipal market compared to
the taxable market was not without consequence. For example,
yields on six-month municipal notes dropped to as low as 60% of
their taxable counterparts by March 31, 1994, compared to a more
traditional relationship of approximately 75%, making short-term
tax-exempt securities a less attractive investment on a relative
value basis.
<PAGE>
For the first half of the March period, we maintained the Fund's
average portfolio maturity in the 75-day range in anticipation of
falling interest rates resulting from strong demand. However, as
the relative value of municipal bonds fell and the Federal Re-
serve Board gave increasingly strong indications that a tighten-
ing of monetary policy was imminent, we began to sell longer-dated
issues and reduced the average maturity to the mid 50-day range
by the beginning of February. We anticipate maintaining this ma-
turity range until a clear picture of the direction of short-term
interest rates emerges. Additionally, new issuance for 1994 is
expected to be relatively unchanged from last year's level of
$51.2 billion. However, prolonged economic growth may prove ben-
eficial to state and local budgets, thus causing them to rely less
on deficit financing. As always, diversification and credit qual-
ity remain paramount in importance to the Fund.
We thank you for your continued interest in CMA Tax-Exempt Fund,
and we look forward to serving your investment needs in the
months and years ahead.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President and Portfolio Manager
May 5, 1994
IMPORTANT TAX INFORMATION
All of the net investment income distributions paid daily by CMA
Tax-Exempt Fund during its taxable year ended March 31, 1994
qualify as tax-exempt interest dividends for Federal income tax
purposes.
Additionally, there were no capital gains distributed during the
Fund's taxable year ended March 31, 1994.
Please retain this information for your records.
<PAGE>
PORTFOLIO ABBREVIATIONS
ACESSM Adjustable Convertible Extendable Securities
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
COP Certificates of Participation
CP Commercial Paper
DDN Daily Demand Notes
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Authority
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
RAW Revenue Anticipation Warrants
S/F Single-Family
TAN Tax Anticipation Notes
TRAN Tax Revenue Anticipation Notes
VRDN Variable Rate Demand Notes
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Alabama-- $ 9,750 Alabama Higher Education Loan Corporation, Student Loan Revenue Bonds,
1.0% VRDN, AMT, Series B, 2.50% due 6/01/2017 (a) $ 9,750
10,090 Alabama Special Care Facilities Financing Authority, Daughters of Charity,
National Health System, Birmingham Revenue Bonds (Saint Vincent's Hospital),
VRDN, 2.30% due 11/01/2013 (a) 10,090
14,400 Birmingham, Alabama, Medical Clinic Board Revenue Bonds (U.A.H.S.F.), DDN,
3.25% due 12/01/2026 (a) 14,400
7,600 McIntosh, Alabama, IDB, PCR (Ciba-Geigy Corporation Project), VRDN, Series A,
2.25% due 12/01/2003 (a) 7,600
37,900 McIntosh, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Ciba-Geigy
Corporation Project), VRDN, AMT, 2.50% due 7/01/2004 (a) 37,900
2,200 Mobile, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Scott Paper
Company), VRDN, Series E, 2.40% due 12/01/2019 (a) 2,200
Alaska-- 35,000 Alaska Housing Finance Corporation Revenue Bonds, VRDN, Series C, 2.15% due
1.0% 6/01/2026 (a) 35,000
10,650 Alaska Industrial Development and Export Authority, IDR, Refunding (Pacific
Corp. Project), VRDN, 2.35% due 12/01/1995 (a) 10,650
30,000 Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Exxon Pipeline Co.
Project), Series B, 2.20% due 5/31/1994 30,010
<PAGE>
Arizona-- 11,700 Arizona Educational Loan Marketing Corp., Educational Loan Revenue Bonds,
1.5% VRDN, AMT, Series A, 2.35% due 3/01/2015 (a) 11,700
1,100 Maricopa County, Arizona, IDA, PCR (Motorola Inc., Project), 2.20% due
10/01/1995 1,100
11,900 Maricopa County, Arizona, PCR (Arizona Public Service Co. Palo Verde Project),
VRDN, 2.25% due 12/01/2009 (a) 11,900
84,300 Maricopa County, Arizona, TAN, 3.10% due 7/29/1994 84,350
6,300 Salt River Project, Arizona, Agricultural Improvement and Power District,
CP, 2.55% due 5/10/1994 6,300
Arkansas-- Arkansas State Student Loan Authority Revenue Bonds, VRDN, AMT (a):
0.5% 20,000 Series B-1, 2.45% due 6/01/2013 20,000
4,100 Series B-4, 2.45% due 6/01/2013 4,100
19,000 Little River County, Arkansas, Solid Waste Disposal Revenue Bonds (Nekoosa
Papers, Inc. Project), VRDN, AMT, 2.40% due 2/01/2025 (a) 19,000
California-- 4,190 Alameda County, California, M/F Mortgage Revenue Refunding Bonds (Quail Run
16.5% Apartments), Series A, VRDN, Series A, 2.35% due 6/01/2015 (a) 4,190
107,580 California HFA, Home Mortgage Revenue Bonds, Series F, 2.50% due 5/02/1994 107,479
California Higher Education Loan Authority, Inc., Student Loan Revenue
Bonds, Series C, AMT:
65,375 2.80% due 6/01/1994 65,375
15,250 2.80% due 7/01/1994 15,250
California Higher Education Loan Authority, Inc., Student Loan Revenue
Refunding Bonds:
20,750 Series A-1, 2.70% due 7/01/1994 20,750
39,900 Series A-2, 2.55% due 5/01/1994 39,900
33,000 VRDN, AMT, Series E-1, 2.25% due 12/01/2022 (a) 33,000
11,950 VRDN, Series A, 2.25% due 6/01/2001 (a) 11,950
15,000 VRDN, Series D-1, 2.25% due 4/01/2000 (a) 15,000
50,000 California Public Capital Improvements, Financing Authority Revenue Bonds
(Pooled Project), Series D, 2.75% due 6/15/1994 50,000
77,000 California State Floating Rate Notes, 2.39% due 6/28/1994 77,004
40,600 California State, RAN, 3.50% due 6/28/1994 40,717
California State, RAW:
62,725 Series A, 3.75% due 12/21/1994 63,053
150,000 Series B, 3.50% due 7/26/1994 150,284
</TABLE>
<PAGE>
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
California $ 40,000 California Statewide Community Development Authority Revenue Bonds,
(concluded) Series A, 3.25% due 6/30/1994 $ 40,045
27,880 Eastern Municipal Water District, California, Water and Sewer Revenue
Refunding Bonds, VRDN, COP, Series B, 2.15% due 7/01/2020 (a) 27,880
9,100 Fresno County, California, TRAN, 3.25% due 7/29/1994 9,111
7,800 Irvine Ranch, California, Water District, Refunding Bonds, DDN, Series B,
3.25% due 8/01/2009 (a) 7,800
15,000 Long Beach, California, CP, AMT, Series A, 2.55% due 5/18/1994 15,000
52,050 Los Angeles, California, Unified School District, TRAN, 3.25% due 7/15/1994 52,124
Los Angeles County, California, TRAN:
82,950 Series A, 3% due 6/30/1994 83,166
15,000 Series B, 2.60% due 5/02/1994 15,000
4,000 Series B, 2.70% due 6/08/1994 4,000
3,300 Mountain View, California, M/F Housing Revenue Bonds (Villa Mariposa
Project), VRDN, Series A, 2.15% due 3/01/2017 (a) 3,300
68,905 Orange County, California, Various Sanitation Districts, COP, Refunding, VRDN,
2.15% due 8/01/2013 (a) 68,905
23,025 Riverside County, California, TRAN, Series A, 3% due 6/30/1994 23,040
11,000 Sacramento County, California, M/F Housing Revenue Bonds (River Oaks
Apartments), VRDN, Series E, 2.35% due 9/15/2007 (a) 11,000
Sacramento County, California, M/F Housing Revenue Bonds, VRDN (a):
7,800 Series A, 2.35% due 4/15/2007 7,800
6,400 Series B, 2.35% due 4/15/2007 6,400
6,000 Series C, 2.35% due 4/15/2007 6,000
21,500 Sacramento County, California, TRAN, 3% due 7/29/1994 21,521
44,030 San Diego County, California, TRAN, 3.25% due 7/29/1994 44,094
155,600 San Francisco, California, City and County, TRAN, 3.25% due 7/15/1994 156,026
11,300 Student Education Loan Marketing Corporation, California Student Loan
Revenue Refunding Bonds, Series A, 2.65% due 11/01/1994 11,300
<PAGE>
Colorado-- Arapahoe County, Colorado, Capital Improvement Trust Fund, Highway
3.5% Revenue Bonds (E-470 Project):
23,785 Series C, 2.80% due 8/31/1994 23,785
8,000 Series D, 2.85% due 8/31/1994 8,000
22,000 Series F, 2.90% due 8/31/1994 22,000
57,000 Series G, 2.90% due 8/31/1994 57,000
66,095 Series I, 2.80% due 8/31/1994 66,095
35,905 Series K, 2.90% due 8/31/1994 35,905
17,000 Colorado Student Obligation Bond Authority, Student Loan Revenue Bonds,
VRDN, AMT, Series B, 2.40% due 7/01/2020 (a) 17,000
Denver, Colorado, City and County Airport Revenue Bonds, AMT:
5,000 CP, Series B, 2.70% due 5/10/1994 5,000
15,000 CP, Series C, 2.70% due 5/12/1994 15,000
10,500 VRDN, Series F, 2.60% due 11/15/2025 (a) 10,500
11,500 VRDN, Series G, 2.55% due 11/15/2025 (a) 11,500
8,000 Westminster, Colorado, IDR, Refunding (Ball Corp. Project), VRDN, 2.20% due
6/01/2005 (a) 8,000
Connecticut-- Connecticut State, HFA (Housing Mortgage Finance Project):
2.4% 24,170 Series H-1, 2.80% due 11/15/1994 24,170
10,000 Series H-2, 2.90% due 11/15/1994 10,000
22,600 Sub-Series E-1, 2.80% due 11/15/1994 22,600
3,900 Sub-Series E-2, 2.90% due 11/15/1994 3,900
75,000 Connecticut State Special Assessment Unemployment Compensation,
Advance Fund Revenue Bonds, Series C, 3% due 7/01/1994 75,037
50,700 Connecticut State Special Tax Obligation Revenue Bonds, VRDN, 2.30% due
12/01/2010 (a) 50,700
</TABLE>
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Delaware-- Delaware State, EDA, Revenue Bonds (Delmarva Power & Light Co. Project),
0.1% VRDN, AMT (a):
$ 4,400 3.15% due 10/01/2017 $ 4,400
2,100 Series A, 3.15% due 10/01/2017 2,100
District of District of Columbia, General Fund Revenue Bonds, DDN (a):
Columbia-- 21,000 Series B, 2.95% due 6/01/2003 21,000
0.8% 7,600 Series B-2, 2.95% due 6/01/2003 7,600
2,700 Series B-3, 2.95% due 6/01/2003 2,700
18,000 District of Columbia, Hospital Revenue Bonds (Providence Hospital--
Daughters of Charity), VRDN, Series 89A, 2.30% due 12/01/2019 (a) 18,000
13,100 District of Columbia Revenue Bonds (George Washington University), VRDN,
Series A, 2.35% due 3/01/2006 (a) 13,100
<PAGE>
Florida-- 3,400 Broward County, Florida, HFA, M/F Housing Revenue Bonds (Margate
1.7% Investments Projects), VRDN, 2.25% due 11/01/2005 (a) 3,400
38,690 Dade County, Florida, Aviation Revenue Refunding Bonds, VRDN, Series V,
2.30% due 10/01/2007 (a) 38,690
Dade County, Florida, Solid Waste Authority, IDR (Montenay-Dade Limited
Project), VRDN (a):
17,800 AMT, 2.50% due 12/01/2010 17,800
900 Series A, 2.50% due 12/01/2013 900
9,900 Dade County, Florida, Special Obligation Capital Asset Acquisition Revenue
Bonds, VRDN, 2.30% due 10/01/2010 (a) 9,900
25,900 Dade County, Florida, Water and Sewer System Revenue Bonds, VRDN, 2.25%
due 10/05/2022 (a) 25,900
16,000 Floating Rate Trust Certificate, Florida, Series 1992--D, 2.40% due 7/01/1994 16,000
400 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric Company
Project), DDN, 2.85% due 9/01/2025 (a) 400
9,900 Martin County, Florida, IDA, Revenue Bonds (Indiantown Cogeneration), VRDN,
AMT, Series A, 2.35% due 7/01/2025 (a) 9,900
6,200 Sunshine State Governmental Financing Commission of Florida Revenue Bonds,
CP, 2.75% due 7/14/1994 6,200
6,860 Volusia County, Florida, Health Facilities Authority Revenue Bonds (Pooled
Hospital Loan Program), ACES, VRDN, 2.30% due 11/01/2015 (a) 6,860
Georgia-- Burke County, Georgia, Development Authority, PCR:
2.4% 18,750 (Georgia Power Company--Plant Vogtle Project), AMT, CP, 2.35%
due 4/14/1994 18,750
41,490 (Oglethorpe Power Corp.), Series A, 2.25% due 1/01/2016 41,490
5,200 DeKalb County, Georgia, IDA Revenue Bonds (Hitachi Chemical America),
VRDN, 2.40% due 8/01/2004 (a) 5,200
Floating Rate Trust Certificates, Georgia:
12,700 Series 1994 A, 2.50% due 7/02/2006 12,700
18,000 Series 1994 D, 2.80% due 5/02/1994 18,000
9,682 Georgia Municipal Association, Pooled Bonds, COP, VRDN, 2.20% due
12/15/2020 (a) 9,682
32,325 Georgia State Housing and Finance Authority Revenue Bonds (Home Ownership
Opportunity), VRDN, AMT, Series B, 2.50% due 6/01/2025 (a) 32,325
22,288 Georgia Trust Certificates, Series 7, VRDN, 2.45% due 1/01/1996 (a) 22,288
6,600 Hapeville, Georgia, Development Authority, IDR (Hapeville Hotel Limited),
DDN, 2.65% due 11/01/2015 (a) 6,600
17,175 Municipal Electric Authority, Georgia, Revenue Bonds, Series B, 2.55% due
6/01/1994 17,175
6,000 Private Colleges and Universities Facilities Authority, Revenue Refunding Bonds
(Emory University Project), CP, Series B, 2.60% due 5/20/1994 6,000
</TABLE>
<PAGE>
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Illinois-- $ 9,000 Chicago, Illinois, Gas Supply Revenue Bonds (Peoples Gas Light & Coke Co.),
8.0% AMT, Series B, 2.55% due 12/01/1994 $ 9,000
Chicago, Illinois, O'Hare International Airport Revenue Bonds (a):
17,200 (American Airlines), DDN, Series C, 2.95% due 12/01/2017 17,200
29,100 (General Airport Second Lien), VRDN, AMT, Series A, 2.45% due 1/01/2018 29,100
14,800 Chicago, Illinois, O'Hare International Airport, Special Facilities Revenue
Bonds (Compagnie Nationale, Air France), VRDN, 2.45% due 5/01/2018 (a) 14,800
23,600 Chicago, Illinois, Revised Tender Agent, VRDN, Series B, 2.20% due
1/01/2012 (a) 23,600
Chicago, Illinois, Tender Notes:
15,400 CP, Series C, 3.25% due 11/30/1994 15,400
35,000 CP, Series C-1, 3.25% due 11/30/1994 35,000
20,000 VRDN, Series B, 2.15% due 10/31/1995 (a) 20,000
19,400 Chicago, Illinois, Tender Notes, Series B, 3.15% due 10/31/1994 19,400
25,000 Cook County, Illinois, TAN, 3.20% due 4/01/1994 25,000
27,150 Evanston, Illinois, BAN, 3% due 6/01/1994 27,175
Illinois Development Finance Authority (a):
12,700 PCR (Diamond Star Motors Project), DDN, 3.25% due 12/01/2008 12,700
3,800 PCR (Illinois Power Co.), VRDN, AMT, Series C, 2.25% due 3/01/2017 3,800
15,000 Revenue Bonds (Lyric Opera Chicago Project), VRDN, 2.25% due 12/01/2028 15,000
10,000 Revenue Bonds (Residential Rental--River Oaks Project), VRDN, AMT,
2.40% due 12/15/2019 10,000
Illinois Educational Facilities Authority Revenue Bonds, VRDN (a):
5,300 (Chicago Historical Society), 2.20% due 12/01/2025 5,300
7,500 (Cultural Pooled Financing Program), 2.25% due 12/01/2025 7,500
15,600 (Illinois Institute of Technology), Series A, 2.20% due 9/01/2025 15,600
Illinois Health Facilities Authority Revenue Bonds:
30,000 (Evangelical Hospital Corporation), VRDN, Series A, 2.20% due
1/01/2010 (a) 30,000
25,000 (Evanston Hospital Corporation Project), 2.40% due 6/16/1994 25,000
35,000 (Evanston Hospital Corporation Project), 3% due 10/17/1994 35,000
10,000 (Evanston Hospital Corporation Project), Series A, 2.65% due 5/05/1994 10,000
30,000 (Evanston Hospital Corporation Project), Series A, 2.80% due 8/31/1994 30,000
10,000 (Evanston Hospital Corporation Project), Series B, 2.65% due 5/05/1994 10,000
50,000 (Evanston Hospital Corporation Project), Series B, 2.65% due 7/28/1994 50,000
10,000 (Evanston Hospital Corporation Project), Series C, 2.65% due 5/05/1994 10,000
5,000 (Evanston Hospital Corporation Project), Series E, 2.65% due 5/05/1994 5,000
14,000 (Highland Park Hospital), VRDN, Series A, 2.65% due 6/01/1994 (a) 14,000
8,700 (Hospital Sisters Services, Inc.), VRDN, 1985 Series E, 2.20%
due 12/01/2014 (a) 8,700
<PAGE>
20,000 (Lutheran Institute), VRDN, Series C, 2.35% due 4/01/2015 (a) 20,000
19,500 (Revolving Fund, Pooled Loan Program), VRDN, Series B, 2.20% due
8/01/2015 (a) 19,500
7,000 (Revolving Fund, Pooled Loan Program), VRDN, Series F, 2.20% due
8/01/2015 (a) 7,000
8,550 Illinois State Refunding Bonds, 4% due 6/01/1994 8,569
46,200 Illinois State Toll Highway Authority, Revenue Refunding Bonds
(Toll Highway Priority), VRDN, Series B, 2.20% due 1/01/2010 (a) 46,200
Indiana-- 39,275 Evansville, Indiana, Hospital Authority Revenue Bonds (Saint Mary's Medical
2.7% Center--Daughters of Charity), VRDN, 2.30% due 11/01/2013 (a) 39,275
Fort Wayne, Indiana, Hospital Authority Revenue Bonds (Parkview Memorial
Hospital), VRDN (a):
1,645 Series B, 2.50% due 1/01/2016 1,645
2,700 Series B, 2.50% due 1/01/2020 2,700
3,505 Series C, 2.50% due 1/01/2016 3,505
5,670 Series D, 2.50% due 1/01/2016 5,670
14,000 Indiana Bond Bank, Advanced Funding Program Notes, Series A-1, 2.85%
due 7/07/1994 14,017
</TABLE>
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Indiana $ 3,845 Indiana Bond Bank, GO, 3.50% due 2/01/1995 $ 3,853
(concluded) Indiana Health Facilities Financing Authority, Hospital Revenue Bonds,
VRDN (a):
1,700 (Daughters of Charity National Health System), ACES, Series B, 2.30%
due 11/01/2022 1,700
5,400 (Daughters of Charity National Health System), Series A, 2.30%
due 11/01/2022 5,400
7,900 (Methodist Hospital of Indiana, Inc.), ACES, Series B, 2.30% due 9/01/2022 7,900
34,200 (Methodist Hospital of Indiana, Inc.), ACES, Series C, 2.30% due 9/01/2022 34,200
Indiana Secondary Market Educational Loans Incorporated, Student Loan
Revenue Bonds, VRDN, AMT (a):
26,900 Series B, 2.25% due 12/01/2013 26,900
9,000 Series F, 2.25% due 12/01/2014 9,000
3,520 Indiana State HFA, S/F Mortgage Revenue Bonds, VRDN, Series C, 2.45%
due 1/01/2016 (a) 3,520
47,810 Marion County, Indiana, Hospital Authority, Hospital Facility Revenue Bonds
(Saint Vincent's Hospital--Daughters of Charity), VRDN, 2.30% due 11/01/2013 (a) 47,810
5,900 Mt. Vernon, Indiana, Pollution Control and Solid Waste Disposal Revenue Bonds
(General Electric Company Project), Series A, CP, 2.55% due 5/11/1994 5,900
<PAGE>
Iowa-- 5,000 Chillicothe, Iowa, PCR, Refunding (Iowa-Illinois Gas & Electric Project), VRDN,
1.4% 2.20% due 1/01/2023 (a) 5,000
Iowa Finance Authority, S/F Revenue Bonds (Mortgage-Backed Securities
Program):
13,080 AMT, Series E, 2.85% due 7/01/1994 13,080
10,520 Series D, 2.65% due 7/01/1994 10,520
9,900 Iowa Finance Authority, Solid Waste Disposal Revenue Bonds (Cedar River
Paper Company Project), VRDN, Series A, 3% due 7/01/2023 (a) 9,900
4,100 Iowa Higher Education Loan Authority Revenue Bonds (Private College
Facilities), VRDN, 2.35% due 12/01/2015 (a) 4,100
50,000 Iowa State, TRAN, Series A, 3.25% due 6/30/1994 50,037
14,500 Iowa Student Loan Liquidity Corporation, Student Loan Revenue Bonds,
VRDN, AMT, Series B, 2.40% due 12/01/2013 (a) 14,500
Kansas-- Wichita, Kansas, Hospital Revenue Bonds (CSJ Health Systems), VRDN (a):
0.2% 1,800 2.30% due 10/01/2002 1,800
15,300 2.30% due 10/01/2008 15,300
Kentucky-- 5,100 Ashland, Kentucky, PCR (Merck & Co./Calgon Carbon Project), VRDN, 1983
0.2% Series A, 2.45% due 10/01/2006 (a) 5,100
9,000 Pendleton County, Kentucky, Multi-County Lease Revenue Bonds (Kentucky
Association of Counties Leasing Program), CP, 2.55% due 5/13/1994 9,000
Louisiana-- 5,200 Louisiana Public Facilities Authority, Hospital Revenue Bonds (Hospital
2.6% Equipment Financing and Refunding Program), VRDN, Series A, 2.45% due
12/01/2005 (a) 5,200
Louisiana State Offshore Terminal Authority, Deepwater Port Revenue
Refunding Bonds (Loop Inc.) (a):
12,485 DDN, Series A, 2.85% due 9/01/2008 12,485
20,000 VRDN, 2.65% due 5/16/1994 20,000
11,500 New Orleans, Louisiana, Exhibition Hall Authority Revenue Bonds (Hotel
Occupancy Tax), VRDN, Series B, 2.50% due 7/01/2018 (a) 11,500
4,400 New Orleans, Louisiana, Levee District, Levee Improvement Revenue Bonds,
VRDN, 3.95% due 11/01/2014 (a) 4,400
Saint Charles Parish, Louisiana, PCR (a):
13,600 (Shell Oil Company Project), DDN, AMT, Series A, 2.90% due 10/01/2022 13,600
4,400 (Shell Oil Company Project), VRDN, 2.05% due 6/01/2005 4,400
17,100 (Shell Oil Company--Norco Project), DDN, AMT, 2.90% due 11/01/2021 17,100
Saint James Parish, Louisiana, PCR, Refunding (Texaco Project), CP:
77,030 Series A, 2.80% due 8/16/1994 77,030
40,030 Series B, 2.80% due 8/16/1994 40,030
</TABLE>
<PAGE>
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Maine-- $ 13,815 Jay, Maine, Solid Waste Disposal Revenue Bonds (International Paper),
0.6% Series A, AMT, 3.25% due 6/01/1994 $ 13,815
31,000 Maine State Housing Authority, Mortgage Purchase Bonds, AMT, 4.60%
due 5/15/1994 31,082
Maryland-- 26,100 Maryland State Health and Higher Educational Facilities Authority Revenue
0.3% Bonds (Daughters of Charity Systems, Incorporated--Saint Agnes Hospital),
VRDN, 2.30% due 7/01/2013 (a) 26,100
Massachusetts-- 32,130 Clipper Tax Exempt Trust, Massachusetts, Class A, VRDN, 2.18%
3.7% due 10/17/2002 (a) 32,130
19,000 Commonwealth of Massachusetts, CP, 2.65% due 6/01/1994 19,000
Eagle Tax Exempt Trust, Massachusetts, VRDN (a):
25,000 2.49% due 10/01/2007 25,000
14,400 Series 1993-J, 2.49% due 8/01/2005 14,400
91,500 Massachusetts Bay Transportation Authority Notes, Series B, 3.25% due
9/30/1994 91,705
11,500 Massachusetts State HFA, Housing Revenue Tender Option Certificates,
Series U1, VRDN, 2.65% due 1/05/2003 (a) 11,500
Massachusetts State, Industrial Finance Agency, PCR, Refunding:
9,000 (New England Power Company Project), Series A, 2.40% due 5/05/1994 9,000
8,700 (North East Power Company Project), CP, 2.60% due 5/03/1994 8,700
65,495 Massachusetts State Notes, Series B, 3.40% due 11/22/1994 65,833
Massachusetts State, VRDN (a):
13,000 Series B, 3.05% due 12/01/1997 13,000
1,700 Series E, 3.05% due 12/01/1997 1,700
<PAGE>
Michigan-- 1,600 Delta County, Michigan, Economic Development Corporation, Environment
2.1% Improvement Revenue Bonds (Mead Escambia), DDN, 2.90% due
12/01/2023 (a) 1,600
19,000 Eagle Tax Exempt Trust, Michigan, Series 1994 C, Class 2201, VRDN, 2.85% due
6/01/2021 (a) 19,000
25,000 Floating Rate Trust Certificates, Michigan, VRDN, Series 1993 K, 2.50% due
10/01/2011 (a) 25,000
6,100 Grand Rapids, Michigan, Water Supply System, Revenue Refunding Bonds,
DDN, 3% due 1/01/2020 (a) 6,100
100 Kent Hospital Finance Authority, Michigan, Hospital Facilities Revenue Bonds
(Butterworth Hospital), VRDN, Series A, 2.30% due 1/15/2020 (a) 100
Michigan Municipal Bond Authority Revenue Notes:
10,955 Series A-7, 3% due 5/05/1994 10,961
24,180 Series B-1, 3% due 5/05/1994 24,190
8,060 Michigan State Building Authority Revenue Bonds, CP, Series I, 2.35% due
4/21/1994 8,060
Michigan State Hospital Finance Authority Revenue Bonds, VRDN (a):
4,400 (Providence Hospital--Daughters of Charity Systems, Incorporated),
2.30% due 11/01/2014 4,400
14,500 (Saint Mary's Hospital), 2.30% due 11/01/2013 14,500
33,450 Michigan State School Loan Notes, GO, 3.25% due 4/29/1994 33,466
2,300 Michigan State Strategic Fund, PCR (Dow Chemical Company Project), CP,
2.15% due 4/06/1994 2,300
Michigan State Strategic Fund, Solid Waste Disposal Revenue Bonds, DDN,
AMT (a):
4,200 (Genessee Power Station Project), 2.90% due 7/01/2033 4,200
1,000 (Grayling Generating Project), 2.45% due 1/01/2014 1,000
3,500 Midland County, Michigan, Economic Development Corporation Revenue
Bonds, DDN, AMT, Series A, 3.15% due 12/01/2023 (a) 3,500
3,700 University of Michigan, University Revenue Refunding Bonds, DDN, Series A,
2.85% due 12/01/2019 (a) 3,700
</TABLE>
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Minnesota-- $ 13,400 Becker, Minnesota, PCR (Northern State Power Company), CP, Series A,
2.1% 2.65% due 5/17/1994 $ 13,400
16,500 Eagle Tax Exempt Trust, Minnesota, Series 1994-C-5, VRDN, 2.49%
due 2/01/2015 (a) 16,500
45,000 Eagle Tax Exempt Trust, Minnesota, VRDN, Series A, 2.49% due 8/01/2006 (a) 45,000
15,700 Minneapolis, Minnesota, Community Development Agency Revenue Bonds
(Riverplace Project-Pinnacle Apartments), VRDN, 2.45% due 2/01/2012 (a) 15,700
74,000 Minnesota State, HFA, S/F Mortgage Bonds, AMT, Series D, 2.60% due 1/12/1995 74,000
4,000 Minnesota State, HFA, State-Assisted Home Improvement Bonds, Series A,
2.50% due 5/17/1994 4,000
<PAGE>
Mississippi-- 10,000 Harrison County, Mississippi, PCR, Refunding (E.I. du Pont de Nemours & Co.),
0.2% DDN, Series E, 2.85% due 9/01/2010 (a) 10,000
3,000 Mississippi Hospital Equipment and Facilities Authority Revenue Bonds
(Mississippi Baptist Medical Center), VRDN, Series B, 2.35% due 7/01/2012 (a) 3,000
Missouri-- 30,000 Eagle Tax Exempt Trust, Missouri, VRDN, Series 1993-E, 2.49% due 8/01/2006 (a) 30,000
1.6% Missouri Higher Education Loan Authority, Student Loan Revenue Bonds,
VRDN, AMT (a):
7,800 Series A, 2.35% due 6/01/2017 7,800
11,700 Series B, 2.35% due 6/01/2020 11,700
Missouri State Health and Educational Facilities Authority, Health Facilities
Revenue Bonds (Sisters of Mercy Health System), VRDN (a):
5,000 Series A, 2.20% due 6/01/2019 5,000
15,500 Series C, 2.20% due 6/01/2019 15,500
4,700 Series D, 2.20% due 6/01/2019 4,700
Missouri State Health and Educational Facilities Authority Revenue Bonds
(Washington University Project) (a):
3,200 DDN, Series A, 3.25% due 3/01/2017 3,200
19,600 DDN, Series B, 3.25% due 3/01/2017 19,600
1,300 VRDN, Series A, 2.35% due 9/01/2010 1,300
29,100 Saint Louis County, Missouri, IDA, Hospital Revenue Bonds (DePaul Hospital--
Daughters of Charity), VRDN, 2.30% due 11/01/2014 (a) 29,100
Nebraska-- Nebraska Higher Education Loan Program, Multiple Mode Student Loan
0.8% Revenue Bonds, VRDN (a):
9,000 Series D, 2.25% due 12/01/2015 9,000
20,100 Series N, 2.25% due 12/01/2015 20,100
Nebraska Higher Education Loan Program, Student Loan Revenue Bonds, AMT:
3,550 Series A, VRDN, 2.40% due 12/01/2016 (a) 3,550
30,150 Series C, 2.10% due 8/01/2018 30,150
Nevada-- 37,000 Clark County, Nevada, Airport Improvement Revenue Refunding Bonds,
0.8% Series A, VRDN, 2.25% due 7/01/2012 (a) 37,000
20,200 Eagle Tax Exempt Trust, Nevada, Series 1993K, VRDN, 2.70% due 8/01/2007 (a) 20,200
Nevada Housing Division, S/F Program Revenue Bonds, VRDN, AMT (a):
740 Series B-2, 2.60% due 10/01/2025 740
7,200 Series D-2, 2.60% due 10/01/2025 7,200
New Hampshire-- 30,000 New Hampshire State, Business Finance Authority, PCR (Northeast Power
1.0% Company Project), AMT, 2.95% due 7/01/1994 30,000
38,400 New Hampshire State, Business Finance Authority, PCR, Refunding (Public
Service Co.), Series E, 2.45% due 5/01/2021 38,400
14,000 New Hampshire State, IDA, Solid Waste Disposal Facilities Revenue Bonds
(United Illuminating Company Project), VRDN, AMT, Series A, 3.05%
due 9/01/1994 (a) 14,000
</TABLE>
<PAGE>
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
New Jersey-- $ 13,800 Cape May County, New Jersey, Municipal Utilities Authority, Solid Waste
1.7% Resource Recovery Revenue Bonds (Daneco Project), AMT, 2.80%
due 11/30/1994 $ 13,800
22,500 Floating Rate Trust Certificate (State of New Jersey Transportation Trust
Fund), Series 92 C, 3% due 6/16/1994 22,500
New Jersey EDA, Dock Facilities, Revenue Refunding Bonds (Bayonne/IMTT
Project), VRDN, Series A (a):
2,300 2.45% due 12/01/2027 2,300
4,000 2.90% due 12/01/2027 4,000
84,500 New Jersey Sports and Exposition Authority, State Contract Revenue Bonds,
VRDN, Series C, 2.20% due 9/01/2024 (a) 84,500
9,700 New Jersey State, TRAN, Series A, 3% due 6/15/1994 9,715
New Mexico-- 10,350 Farmington, New Mexico, PCR (Arizona Public Service Co.- Four Corners
0.5% Project), 2.20% due 5/01/2013 10,350
New Mexico Educational Assistance Foundation, Student Loan Revenue
Bonds, VRDN, AMT (a):
4,900 Series B, 2.40% due 4/01/2005 4,900
17,600 Series I, 2.45% due 9/01/2008 17,600
6,430 New Mexico State Hospital Equipment Loan Council, Hospital Equipment and
Improvement Revenue Bonds, VRDN, 2.25% due 5/01/2009 (a) 6,430
New York-- 35,500 Buffalo, New York, RAN, Series A, 3% due 7/14/1994 35,541
5.5% 11,400 Monroe County, New York, Public Improvement, BAN, Series C, 2.50%
due 6/10/1994 11,407
73,500 New York City, New York, Indexed, TAN, Series A, 2.19% due 4/08/1994 73,498
New York City, New York, Municipal Water Finance Authority, Water and
Sewer Systems Revenue Bonds, BAN, Series A:
6,300 2.75% due 4/15/1994 6,300
103,120 3.75% due 12/15/1994 103,764
New York City, New York, RAN:
5,400 Series A, 3.25% due 4/15/1994 5,401
7,200 Series B, 3.50% due 6/30/1994 7,214
111,400 New York City, New York, TAN, Series A, 3.125% due 4/08/1994 111,412
545 New York State Job Development Authority, Revenue Bonds, Series A, DDN,
AMT, 3.10% due 3/01/2005 (a) 545
16,000 New York State Local Government Assistance Corporation, VRDN, Series B,
2.30% due 4/26/1994 (a) 16,000
6,500 Port Authority, New York and New Jersey, Special Obligation Revenue Bonds
(Versatile Structure Obligations), DDN, Series 1, 2.80% due 8/01/2028 (a) 6,500
14,500 Rochester, New York, BAN, 2.74% due 11/04/1994 14,522
40,700 Suffolk County, New York, TAN, Series I, 2.70% due 8/16/1994 40,755
<PAGE>
North Carolina-- 12,800 Craven County, North Carolina, Industrial Facilities and Pollution Control
1.9% Finance Authority Revenue Bonds (Cravenwood Energy Project), DDN, AMT,
Series C, 2.75% due 5/01/2011 (a) 12,800
2,600 Halifax County, North Carolina, Industrial Facilities and Pollution Control
Finance Authority Revenue Bonds (Westmoreland), DDN, 3% due
12/01/2019 (a) 2,600
North Carolina Educational Facilities Finance Agency Revenue Bonds, VRDN (a):
23,950 (Bowman Grey School of Medicine Project), 2.20% due 9/01/2020 23,950
20,240 (Duke University Project), Series A, 2.15% due 6/01/2027 20,240
15,000 (Duke University Project), Series B, 2.15% due 12/01/2021 15,000
North Carolina Medical Care Commission, Hospital Revenue Bonds, VRDN (a):
2,000 (Duke University Hospital Project), Series C, 2.15% due 6/01/2015 2,000
1,700 (Duke University Hospital), Series B, 2.15% due 6/01/2015 1,700
18,500 (North Carolina Baptist Hospital Project), Series B, 2.20% due 6/01/2022 18,500
13,600 (Pooled Equipment Financing Project), ACES, 2.30% due 12/01/2025 13,600
3,500 (Pooled Financing Project), ACES, Series B, 2.95% due 10/01/2013 3,500
</TABLE>
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
North Carolina $ 9,000 North Carolina Medical Care Commission, Hospital Revenue Refunding Bonds
(concluded) (Moses H. Cone Memorial Hospital Project), VRDN, 2.20% due 10/01/2023 (a) $ 9,000
10,300 North Carolina Medical Care Commission Revenue Bonds (Carol Woods
Project), DDN, 3.05% due 4/01/2021 (a) 10,300
11,000 University of North Carolina, Chapel Hill, School of Medicine and Ambulatory
Care Revenue Bonds, CP, 2.55% due 4/14/1994 11,000
3,300 Wake County, North Carolina, Industrial Facilities and Pollution Control
Finance Authority Revenue Bonds (Carolina Power and Light Company),
DDN, 3.10% due 3/01/2017 (a) 3,300
<PAGE>
Ohio-- 16,400 Cincinnati, Ohio, Student Loan Funding Corporation, Student Loan Revenue
2.8% Bonds, VRDN, Series 1983-A, 2.25% due 12/29/1998 (a) 16,400
5,000 Clinton County, Ohio, Airport Facilities Revenue Refunding Bonds
(Wilmington Air Park, Inc.), VRDN, 2.35% due 6/01/2011 (a) 5,000
3,700 Columbus, Ohio, Sewer Revenue Bonds, VRDN, Series B, 2.20% due
6/01/2011 (a) 3,700
10,300 Cuyahoga County, Ohio, Hospital Revenue Improvement Bonds (Cleveland
University Hospital), DDN, 2.90% due 1/01/2016 (a) 10,300
2,800 Hamilton County, Ohio, Health Care Systems Revenue Bonds (Franciscan
Sister Poor Health), DDN, Series A, 2.90% due 3/01/2017 (a) 2,800
1,865 Ohio HFA, M/F Housing Revenue Bonds (Kenwood Congregate Retirement
Program), VRDN, 2.25% due 12/01/2015 (a) 1,865
Ohio HFA, S/F Mortgage Revenue Bonds, AMT:
81,740 Series A-1, 2.95% due 6/01/1994 81,740
19,000 Series A-2, 2.95% due 6/01/1994 19,000
Ohio State Air Quality Development Authority, PCR:
10,500 (Cleveland Electric), Series B, 2.65% due 5/05/1994 10,500
17,000 (Ohio Education), AMT, Series C, 3.125% due 9/01/1994 17,017
Ohio State Air Quality Development Authority, Revenue Refunding Bonds
(JMG Funding Project), VRDN, AMT (a):
23,400 Series A, 2.30% due 10/01/2027 23,400
19,000 Series B, 2.45% due 10/01/2027 19,000
5,000 Ohio State Public Facilities Commission, Higher Education Capital Facilities,
Refunding Bonds, Series II-A, 4.60% due 6/01/1994 5,016
3,000 Scioto County, Ohio, Hospital Facilities Revenue Bonds (VHA Central Inc.
Capital Asset), VRDN, Series C, 2.20% due 12/01/2025 (a) 3,000
6,100 Scioto County, Ohio, Marine Terminal Facility, Revenue Refunding Bonds
(Norfolk Southern Corporation Project), VRDN, 2.20% due 8/15/2013 (a) 6,100
Oklahoma-- 10,800 Oklahoma City, Oklahoma, Industrial and Cultural Facilities Revenue Bonds,
0.1% ACES, VRDN, Series A, 2.35% due 6/01/2006 (a) 10,800
Oregon-- Oregon State GO, Veterans' Welfare Bonds, VRDN (a):
1.0% 53,000 Series 73-E, 2.20% due 12/01/2016 53,000
15,000 Series 73-G, 2.50% due 12/01/2018 15,000
7,300 Port of Portland, Oregon, Public Grain Elevator Revenue Bonds (Columbia
Grain Incorporated Project), VRDN, Series A, 2.45% due 12/01/2014 (a) 7,300
Pennsylvania-- 1,400 Allegheny County, Pennsylvania, Hospital Development Authority Revenue
5.0% Bonds (Presbyterian Health Center), VRDN, 2.25% due 3/01/2020 (a) 1,400
27,000 Allegheny County, Pennsylvania, IDA, PCR (Duquesne Light Project), Series A,
2.75% due 10/20/1994 27,000
1,000 Authority Improvement Municipalities of Allegheny County, Pennsylvania,
Hospital Equipment Leasing Revenue Bonds, VRDN, 2.30% due 9/01/1995 (a) 1,000
2,500 Butler County, Pennsylvania, IDA, Revenue Refunding Bonds (Wetterau
Finance Co. Project), VRDN, 2.35% due 12/01/2014 (a) 2,500
4,800 Cambria County, Pennsylvania, IDA, Resource Recovery Revenue Bonds
(Cambria Cogen Project), VRDN, AMT, Series V-1, 2.35% due 9/01/2019 (a) 4,800
3,000 Delaware County, Pennsylvania, IDA, Solid Waste Revenue Bonds (Scott
Paper Company), VRDN, Series B, 2.55% due 12/01/2018 (a) 3,000
</TABLE>
<PAGE>
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Pennsylvania Emmaus, Pennsylvania, General Authority Revenue Bonds (Local
(concluded) Government), VRDN (a):
$ 12,500 Sub-Series E-4, 2.50% due 3/01/2024 $ 12,500
12,500 Sub-Series E-5, 2.50% due 3/01/2024 12,500
19,500 Geisinger Authority, Pennsylvania, Health Systems Revenue Bonds, DDN,
Series B, 3.25% due 7/01/2022 (a) 19,500
6,400 Montgomery County, Pennsylvania, Higher Education and Health Authority,
Hospital Revenue Bonds (Holy Redeemer Hospital), VRDN, 2.30% due
9/01/2018 (a) 6,400
34,800 Northampton County, Pennsylvania, IDA, Resource Recovery Revenue Bonds
(Glendon Energy Company Project), AMT, Series A, 3.75% due 10/01/1994 34,800
7,300 Pennsylvania Economic Development Financing Authority, Solid Waste
Disposal Revenue Bonds (Inter-Power/AITLCON Partners Project), 1992
Series A, CP, AMT, 2.55% due 4/20/1994 7,300
17,450 Pennsylvania Energy Development Authority Revenue Bonds (B&W Ebensburg
Project), VRDN, 2.40% due 12/01/2011 (a) 17,450
Pennsylvania State Higher Education Assistance Agency, Student Loan
Revenue Bonds, VRDN (a):
57,800 1984 Series A, 2% due 12/01/2000 57,800
11,000 AMT, Series A, 2.45% due 1/01/2008 11,000
8,200 AMT, Series B, 2.25% due 7/01/2018 8,200
Pennsylvania State Higher Educational Facilities Authority, College and
University Revenue Bonds (a):
8,000 (Carnegie-Mellon University), VRDN, Series A, 2.35% due 11/01/2015 8,000
38,200 (Temple University), DDN, 3.25% due 10/01/2009 38,200
21,645 Pennsylvania State, TAN, First Series, 3.25% due 6/30/1994 21,699
46,350 Philadelphia, Pennsylvania, Hospital and Higher Education Facilities Authority,
Hospital Revenue Bonds (Children's Hospital of Philadelphia Project), DDN,
3.25% due 3/01/2027 (a) 46,350
Philadelphia, Pennsylvania, IDA, VRDN, Revenue Bonds (a):
10,200 (30th Street Station Project), AMT, 2.35% due 1/01/2011 10,200
8,800 (Institute for Cancer Research Project), Series A, 3.25% due 7/01/2013 8,800
9,000 (Philadelphia Airport Hotel), AMT, 2.35% due 12/01/2017 9,000
20,880 Sayre, Pennsylvania, Health Care Facilities Authority Revenue Bonds (VHA of
Pennsylvania, Inc., Capital Assets Financing Program), VRDN, Series L, 2.20%
due 12/01/2020 (a) 20,880
9,000 Schuylkill County, Pennsylvania, IDA, Resource Recovery Revenue Bonds
(Northeastern Power Company Project), DDN, 2.85% due 12/01/2011 (a) 9,000
<PAGE>
Rhode Island-- Rhode Island Housing and Mortgage Finance Corp., Homeowner Opportunity
0.9% Revenue Bonds, VRDN (a):
13,800 AMT, Series 9-B, 2.60% due 4/01/2013 13,800
16,000 Series 10-B, 2.50% due 10/01/2025 16,000
41,100 Series 14-A, 2.50% due 4/01/2027 41,100
South Carolina-- 11,200 Charleston County, South Carolina, IDR, Refunding (Massey Coal Terminal SC
0.9% Corporation), DDN, 2.90% due 1/01/2007 (a) 11,200
13,349 Floating Rate Trust Certificate, South Carolina, VRDN, Series C, 2.40%
due 1/02/1995 (a) 13,349
28,840 Georgetown County, South Carolina, Pollution Control Facilities, Revenue
Refunding Bonds (International Paper Co. Project), Series A, 3.125% due
9/01/1994 28,840
South Carolina EDA Revenue Bonds, DDN (a):
4,700 (Saint Francis Hospital Project), 2.90% due 7/01/2022 4,700
1,200 (Wellman, Inc. Project), AMT, 3.05% due 12/01/2012 1,200
13,000 South Carolina State Housing Finance and Development Authority Revenue
Bonds, 2.80% due 6/01/1994 13,000
South Dakota-- 18,000 South Dakota Student Loan Assistance Corporation, Student Loan Revenue
0.2% Bonds, VRDN, AMT, Sub-Series B, 2.45% due 8/01/2010 (a) 18,000
</TABLE>
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Tennessee-- $ 9,500 Cleveland, Tennessee, IDB, Revenue Bonds (Newly Wed Foods Incorporated
1.7% Project), VRDN, AMT, 2.45% due 1/01/2012 (a) $ 9,500
8,100 Loudon, Tennessee, IDB, PCR, Refunding (A.E. Staley Manufacturing Co.
Project), VRDN, 2.35% due 9/01/2001 (a) 8,100
14,955 Morristown, Tennessee, IDB, PCR, Refunding (Akzo Chemicals, Inc. Project),
VRDN, 2.35% due 8/01/2001 (a) 14,955
17,300 Nashville, Tennessee, Metropolitan Airport Authority, Revenue Refunding and
Improvement Bonds, VRDN, 2.20% due 7/01/2019 (a) 17,300
5,500 Tennessee State, BAN, VRDN, 2.75% due 5/01/1996 (a) 5,500
9,500 Tennessee State, Local Development Authority Revenue Bonds (State Loan
Programs), BAN, Series A, 3% due 6/02/1994 9,507
Volunteer State Student Funding Corporation, Tennessee, Student Loan
Revenue Bonds, VRDN (a):
12,000 Series A-1, 2.30% due 12/01/2017 12,000
54,000 Series A-3, 2.30% due 12/01/2017 54,000
<PAGE>
Texas-- Brazos, Texas, Higher Education Authority Incorporated, Student Loan
9.4% Revenue Bonds, AMT:
5,000 Series B-1, 2.80% due 6/01/1994 5,000
23,000 VRDN, Series B, 2.70% due 5/02/1994 (a) 23,000
4,000 Corpus Christi, Texas, IDR (Dedietrich USA Incorporated Project), VRDN, AMT,
2.30% due 11/01/2008 (a) 4,000
9,110 Galveston County, Texas, Health Facilities Development Corporation Revenue
Bonds (Devereux Foundation Project), VRDN, 2.35% due 1/01/2016 (a) 9,110
18,800 Grapevine, Texas, IDR, Airport Revenue Refunding (Southern Air
Transportation Project), VRDN, 2.25% due 3/01/2010 (a) 18,800
22,500 Gulf Coast Waste Disposal Authority, Texas, PCR (Amoco Oil Co. Project),
DDN, AMT, 2.90% due 5/01/2023 (a) 22,500
9,315 Gulf Coast Waste Disposal Authority, Texas, PCR, Refunding (Amoco Oil
Company Project), VRDN, 2.75% due 10/01/2017 (a) 9,315
Harris County, Texas, Health Facilities Development Corporation, Hospital
Revenue Bonds (Saint Luke's Episcopal Hospital), DDN (a):
7,300 Series B, 3.25% due 2/15/2016 7,300
21,100 Series C, 3.25% due 2/15/2016 21,100
3,900 Series D, 3.25% due 2/15/2016 3,900
7,100 Harris County, Texas, Industrial Development Corporation, PCR (Exxon
Project), Series 1984-A, VRDN, 2.60% due 3/01/2024 (a) 7,100
Harris County, Texas, Toll Road Revenue Bonds, VRDN (a):
27,500 Series B, 2.20% due 8/01/2015 27,500
8,400 Series C, 2.20% due 8/01/2015 8,400
20,500 Series D, 2.20% due 8/01/2015 20,500
Houston, Texas, Health Facilities Development Corporation, Hospital Revenue
Bonds (Methodist Hospital Project), DDN (a):
15,400 3.25% due 12/01/2014 15,400
12,300 3.25% due 12/01/2015 12,300
11,500 3.25% due 12/01/2021 11,500
7,000 Houston, Texas, Public Improvement Bonds, VRDN, Series A, 2.35% due
4/01/2013 (a) 7,000
23,500 Lubbock, Texas, Health Facilities Development Corporation Revenue Bonds
(Saint Joseph Health System), DDN, Series A, 2.85% due 7/01/2013 (a) 23,500
North Texas Higher Education Authority Incorporated, Student Loan
Revenue Bonds, VRDN (a):
5,000 AMT, 2.55% due 12/01/2005 5,000
13,700 AMT, Series F, 2.35% due 4/01/2020 13,700
3,000 Refunding, 2.25% due 3/01/1999 3,000
23,700 Refunding, 2.25% due 3/01/2005 23,700
29,000 Refunding, Series A, 2.25% due 4/01/2005 29,000
5,000 Refunding, Series A, 2.25% due 4/01/2020 5,000
</TABLE>
<PAGE>
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Texas $ 9,000 Panhandle Plains, Texas, Higher Education Authority Incorporated, Student
(concluded) Loan Revenue Bonds, VRDN, AMT, Series A, 2.65% due 4/01/1994 (a) $ 9,000
San Antonio, Texas, Electric and Gas Revenue Bonds, CP, Series A:
14,000 2.70% due 5/19/1994 14,000
9,000 2.60% due 5/26/1994 9,000
20,000 San Antonio, Texas Electric and Gas Revenue Refunding Bonds (Sub Lien),
7% due 8/01/1994 20,576
19,600 San Antonio, Texas, Higher Education Authority Revenue Refunding Bonds
(Trinity University Project), VRDN, 2.30% due 4/01/2004 (a) 19,600
10,500 San Antonio, Texas, Tender Options, Refunding, VRDN, 2.60% due 5/19/1994 (a) 10,500
34,500 Tarrant County, Texas, Health Facilities Revenue Bonds (Daughters of
Charity--National Health Systems), VRDN, 2.30% due 9/01/2021 (a) 34,500
7,800 Texas State, Multi-Modal Water Development Board, DDN,
Series A, 3.25% due 3/01/2015 (a) 7,800
Texas State, Public Finance Authority Revenue Bonds, CP:
10,000 Series A, 2.20% due 8/03/1994 10,000
19,000 Series A, 2.50% due 10/27/1994 19,000
13,500 Series B, 2.75% due 7/21/1994 13,500
182,590 Texas State, TRAN, 3.25% due 8/31/1994 183,387
28,360 Travis County, Texas, Health Facility Development Corporation Revenue Bonds
(Daughters of Charity--Seton Medical Center), VRDN, 2.30% due 11/01/2013 (a) 28,360
Waco, Texas, Health Facilities Development Corporation, Health Facilities
Revenue Bonds (Daughters of Charity--Providence Hospital), VRDN (a):
18,775 2.30% due 11/01/2013 18,775
12,400 Series 88A, 2.30% due 11/01/2018 12,400
Utah-- Intermountain Power Agency, Utah, Power Supply Revenue Bonds:
1.1% 16,000 CP, Series E, 2.65% due 4/21/1994 16,000
13,400 CP, Series E, 2.65% due 5/09/1994 13,400
10,000 CP, Series E, 2.75% due 7/20/1994 10,000
17,000 VRDN, Series E, 3% due 9/15/1994 (a) 17,000
22,400 VRDN, Series F, 3% due 9/15/1994 (a) 22,400
6,000 Utah State Board of Regents, Student Loan Revenue Bonds, VRDN, AMT,
Series C, 2.25% due 11/01/2013 (a) 6,000
<PAGE>
Virginia-- 5,330 Fairfax County, Virginia, Redevelopment and Housing Authority, M/F Housing
3.2% Revenue Bonds (Chase Commons Apartments Project), VRDN, 2.325%
due 12/01/2006 (a) 5,330
2,400 Roanoke, Virginia, IDA, Hospital Revenue Bonds (Roanoke Memorial Hospital),
DDN, Series A, 3.25% due 7/01/2017 (a) 2,400
16,000 Rockingham County, Virginia, IDA, Revenue Bonds (Merck & Company Project),
VRDN, Series A, 2.45% due 10/01/2020 (a) 16,000
1,000 Rockingham County, Virginia, IDA, Revenue Bonds, VRDN, 2.70% due
10/01/2022 (a) 1,000
Virginia State Housing Development Authority, Commonwealth Mortgage
Revenue Bonds:
41,500 AMT, Series E, Sub-Series E, 3.05% due 8/10/1994 41,507
19,500 VRDN, Series A, Sub-Series A, 2.80% due 11/04/1994 (a) 19,500
55,000 VRDN, Series C, Sub-Series C, 2.30% due 4/20/1994 (a) 55,000
16,500 VRDN, Series C, Sub-Series C, 2.95% due 5/12/1994 (a) 16,500
Virginia State Housing Development Authority, VRDN, AMT (a):
71,800 Series I, Sub-Series I, 2.80% due 11/04/1994 71,807
27,400 Series J, Sub-Series J, 2.70% due 11/04/1994 27,403
Washington-- 26,700 Eagle Tax Exempt Trust, Washington, Series 1994--A, VRDN, 2.49%
2.0% due 6/01/2005 (a) 26,700
7,690 Washington State HFA, S/F Mortgage Revenue Bonds (Mortgaged-Backed
Securities Program), VRDN, Series D, 2.80% due 6/10/1994 (a) 7,690
</TABLE>
CMA TAX-EXEMPT FUND
<TABLE>
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1994 (CONCLUDED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Washington $ 10,955 Washington State Housing Finance Commission, S/F Mortgage Revenue
(concluded) Refunding Bonds (Mortgage-Backed Securities Program), VRDN, Series B,
2.60% due 6/10/1994 (a) $ 10,955
Washington State Public Power Supply System, Revenue Refunding
Bonds, VRDN (a):
21,580 (Nuclear Project No.1), Series 1A-3, 2.50% due 7/01/2017 21,580
25,000 (Nuclear Project No.3), Series 3A-1, 2.15% due 7/01/2018 25,000
9,500 (Nuclear Project No.3), Series 3A-2, 2.20% due 7/01/2018 9,500
14,630 Washington State Refunding Bonds, Series R-94A, 3.25% due 8/01/1994 14,640
Washington Student Loan Finance Association Revenue Bonds (Guaranteed
Student Loan Program), VRDN (a):
12,100 AMT, Series A, 2.35% due 12/01/2002 12,100
6,000 AMT, Series B, 2.35% due 12/01/2002 6,000
10,680 AMT, Series B, 2.05% due 1/01/2004 10,680
10,400 Series A, 1.90% due 1/01/2001 10,400
<PAGE>
West Virginia-- 19,500 Grant County, West Virginia, PCR (Virginia Electric Power Co.), 2.90%
0.4% due 7/29/1994 19,500
11,220 Hancock County, West Virginia, County Commission, IDR, Refunding (The Boc
Group Inc. Project), VRDN, 2.35% due 8/01/2005 (a) 11,220
Wisconsin-- Eagle Tax Exempt Trust, Wisconsin, VRDN (a):
1.3% 13,400 Series 94, C4902, 2.64% due 9/01/2016 13,400
30,300 Series 1993 H, 2.70% due 11/01/2008 30,300
7,600 Series 1994, C4902, 2.49% due 9/01/2015 7,600
16,000 Green Bay, Wisconsin, Metropolitan Sewer District, Promissory Notes, 3% due
4/15/1994 16,001
16,000 Sheboygan, Wisconsin, PCR, Refunding (Wisconsin Power and Light Company
Project), DDN, Series A, 3% due 9/01/2015 (a) 16,000
15,000 West Allis, Milwaukee, Wisconsin, School District TRAN, 3.25% due 8/24/1994 15,020
5,590 Wisconsin State GO, Series A, 4.70% due 5/01/1994 5,600
2,300 Wisconsin State Health Facilities Authority Revenue Bonds (Saint Mary's
Hospital of Milwaukee), VRDN, 2.30% due 11/01/2016 (a) 2,300
Wyoming-- Lincoln County, Wyoming, PCR (Exxon Project):
1.4% 9,900 CP, AMT, Series A, 2.65% due 7/01/2017 9,900
1,500 DDN, Series B, 2.60% due 11/01/2014 (a) 1,500
1,400 DDN, Series D, 2.60% due 11/01/2014 (a) 1,400
10,000 Sublette County, Wyoming, PCR (Exxon Project), CP, Series A, 3% due
7/01/2017 10,000
Sweetwater County, Wyoming, PCR, VRDN (a):
5,300 (Chevron Chemical Company Project), 2.60% due 6/15/1994 5,300
17,500 Refunding (Pacific Corporation Project), 2.10% due 7/01/2015 17,500
Uinta County, Wyoming, PCR:
10,000 (Amoco Oil Company Project), Series A, 2.90% due 12/01/1994 10,000
5,950 (Chevron USA Inc. Project), 2.60% due 6/15/1994 5,950
6,500 Refunding (Chevron USA Inc. Project), DDN, 2.75% due 12/01/2022 (a) 6,500
39,000 Refunding (Chevron USA Inc. Project), VRDN, 2.75% due 8/15/2020 (a) 39,000
Puerto Rico-- 24,050 Commonwealth of Puerto Rico, TRAN, Series A, 3% due 7/29/1994 24,127
0.3%
Total Investments (Cost--$7,991,614)--101.0% 7,991,614
Liabilities in Excess of Other Assets--(1.0%) (79,654)
----------
Net Assets--100.0% $7,911,960
==========
<FN>
(a)The interest rate is subject to change periodically based on
certain indexes. The interest rate shown is the rate in effect
at March 31, 1994.
*Cost for Federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
<PAGE>
CMA TAX-EXEMPT FUND
<TABLE>
STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 31, 1994
<CAPTION>
<S> <C> <C>
Assets:
Investments, at value (identified cost--$7,991,613,852) (Note 1a) $ 7,991,613,852
Cash 94,268
Receivables:
Interest $ 52,059,528
Securities sold 34,800,000 86,859,528
--------------
Prepaid registration fees and other assets (Note 1d) 195,874
---------------
Total assets 8,078,763,522
---------------
Liabilities:
Payables:
Securities purchased 162,091,004
Investment adviser (Note 2) 2,645,545
Distributor (Note 2) 1,392,833
Beneficial interest redeemed 48,291 166,177,673
--------------
Accrued expenses and other liabilities 626,238
---------------
Total liabilities 166,803,911
---------------
Net Assets $ 7,911,959,611
===============
Net Assets Consist of:
Shares of beneficial interest, $.10 par value, unlimited number of shares
authorized $ 791,629,310
Paid-in capital in excess of par 7,124,663,791
Undistributed investment income--net 239,945
Accumulated realized capital losses--net (Note 4) (4,573,435)
---------------
Net Assets--Equivalent to $1.00 per share based on 7,916,293,100 shares of
beneficial interest outstanding $ 7,911,959,611
===============
</TABLE>
<PAGE>
CMA TAX-EXEMPT FUND
<TABLE>
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1994
<CAPTION>
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 189,787,605
Expenses:
Investment advisory fees (Note 2) $ 29,468,384
Distribution fees (Note 2) 9,483,835
Transfer agent fees (Note 2) 994,413
Registration fees (Note 1d) 666,501
Accounting services (Note 2) 391,102
Custodian fees 236,180
Printing and shareholder reports 143,522
Professional fees 72,109
Pricing fees 44,651
Trustees' fees and expenses 41,097
Other 53,361
--------------
Total expenses 41,595,155
---------------
Investment income--net 148,192,450
Realized Gain on Investments--Net (Note 1c) 51,826
---------------
Net Increase in Net Assets Resulting from Operations $ 148,244,276
===============
See Notes to Financial Statements.
</TABLE>
CMA TAX-EXEMPT FUND
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended March 31
1994 1993
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Investment income--net $ 148,192,450 $ 176,344,588
Realized gain on investments--net 51,826 1,833,823
---------------- ----------------
Net increase in net assets resulting from operations 148,244,276 178,178,411
---------------- ----------------
Dividends to Shareholders (Note 1e):
Investment income--net (147,847,067) (176,157,543)
---------------- ----------------
Net decrease in net assets resulting from dividends to shareholders (147,847,067) (176,157,543)
---------------- ----------------
<PAGE>
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 25,164,582,052 23,538,762,541
Net asset value of shares issued to shareholders in reinvestment of dividends
(Note 1e) 147,842,729 176,161,162
---------------- ----------------
25,312,424,781 23,714,923,703
Cost of shares redeemed (24,927,916,358) (24,064,327,440)
---------------- ----------------
Net increase (decrease) in net assets derived from beneficial interest
transactions 384,508,423 (349,403,737)
---------------- ----------------
Net Assets:
Total increase (decrease) in net assets 384,905,632 (347,382,869)
Beginning of year 7,527,053,979 7,874,436,848
---------------- ----------------
End of year* $ 7,911,959,611 $ 7,527,053,979
================ ================
<FN>
*Undistributed investment income--net $ 239,945 $ 55,066
================ ================
</TABLE>
CMA TAX-EXEMPT FUND
<TABLE>
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived
from information provided in the financial statements.
For the Year Ended March 31,
Increase (Decrease) in Net Asset Value: 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Investment income--net .02 .02 .04 .05 .06
Realized and unrealized gain (loss) on
investment--net -- -- -- -- --
---------- ---------- ---------- ---------- ----------
Total from investment operations .02 .02 .04 .05 .06
---------- ---------- ---------- ---------- ----------
Less dividends:
Investment income--net (.02) (.02) (.04) (.05) (.06)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment Return 1.96% 2.36% 3.76% 5.39% 5.94%
========== ========== ========== ========== ==========
<PAGE>
Ratios to Average Net Assets:
Expenses, excluding distribution fees .42% .42% .42% .41% .42%
========== ========== ========== ========== ==========
Expenses .55% .54% .54% .54% .54%
========== ========== ========== ========== ==========
Investment income--net 1.94% 2.33% 3.70% 5.24% 5.79%
========== ========== ========== ========== ==========
Supplemental Data:
Net assets, end of year (in thousands) $7,911,960 $7,527,054 $7,874,437 $8,695,795 $8,356,203
========== ========== ========== ========== ==========
See Notes to Financial Statements.
</TABLE>
CMA TAX-EXEMPT FUND
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
CMA Tax-Exempt Fund (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end
investment management company. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of investments--Investments are valued at amor-
tized cost which approximates market. For the purpose of val-
uation, the maturity of a variable rate demand instrument is
deemed to be the next coupon date on which the interest rate is
to be adjusted. In the case of a floating rate instrument, the
remaining maturity is the demand notice payment period.
(b) Income taxes--It is the Fund's policy to comply with the re-
quirements 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.
(c) Security transactions and investment income--Security trans-
actions are recorded on the dates the transactions are entered
into (the trade dates). Interest income (including amortization
of premium and discount) is recognized on the accrual basis. Real-
ized gains and losses on security transactions are determined on
the identified cost basis.
(d) Prepaid registration fees--Prepaid registration fees are charged
to expense as the related shares are issued.
<PAGE>
(e) Dividends to shareholders--The Fund declares dividends daily
and reinvests daily such dividends (net of non-resident alien tax
withheld) in additional fund shares at net asset value. Dividends
are declared from the total of net investment income, excluding dis-
counts earned other than original issue discounts. Net realized
capital gains, if any, are normally distributed annually after de-
ducting prior years' loss carryforward. The Fund may distribute
capital gains more frequently than annually in order to maintain
the Fund's net asset value at $1.00 per share.
(f) Reclassifications--Certain 1993 amounts have been reclassified
to conform to the 1994 presentation. Undistributed investment income--
net, in the amount of $4,800,504, has been reclassified to accum-
ulated realized capital losses--net.
2. Investment Advisory Agreement and Transactions with
Affiliates:
The Fund has entered into an Investment Advisory Agreement with
Fund Asset Management, L.P. ("FAM"). Effective January 1, 1994,
the investment advisory business of FAM was reorganized from a
corporation to a limited partnership. Both prior to and after the
reorganization, ultimate control of FAM was vested with Merrill
Lynch & Co., Inc. ("ML & Co."). The general partner of FAM is
Princeton Services, Inc., an indirect wholly-owned subsidiary of
ML & Co. The limited partners are ML & Co. and Merrill Lynch
Investment Management, Inc. ("MLIM"), which is also an indirect
wholly-owned subsidiary of ML & Co.
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: 0.50% of the Fund's average daily net assets not
exceeding $500 million; 0.425% of the average daily net assets
in excess of $500 million but not exceeding $1 billion; and
0.375% of the average daily net assets in excess of $1 billion.
The Investment Advisory Agreement obligates FAM to reimburse the
Fund to the extent the Fund's expenses (excluding interest,
taxes, distribution fees, brokerage fees and commissions, and
extraordinary items) exceed 2.5% of the Fund's first $30 million
of average daily net assets, 2.0% of the next $70 million of
average daily net assets, and 1.5% of the average daily net
assets in excess thereof. No fee payment will be made to the
Adviser during any year which will cause such expenses to exceed
the pro rata expense limitation at the time of such payment.
<PAGE>
CMA TAX-EXEMPT FUND
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
Pursuant to the Distribution and Shareholder Servicing Plan in
compliance with Rule 12b-1 under the Investment Company Act of
1940, Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S")
receives a distribution fee from the Fund at the end of each
month at the annual rate of 0.125% of the average daily net
assets of the Fund. The distribution fee is to compensate MLPF&S
financial consultants and other directly involved branch office
personnel for selling shares of the Fund and for providing direct
personal services to shareholders. The distribution fee is not
compensation for the administrative and operational services
rendered to the Fund by MLPF&S in processing share orders and
administering shareholder accounts.
Financial Data Services, Inc. ("FDS"), a wholly-owned subsidiary
of ML & Co., is the Fund's transfer agent.
Accounting services are provided to the Fund by FAM at cost.
Certain officers and/or trustees of the Fund are officers and/or
directors of FAM, MLIM, MLPF&S, FDS, and/or ML & Co.
3. Shares of Beneficial Interest:
The number of shares purchased and redeemed during the periods
corresponds to the amounts included in the Statements of Changes
in Net Assets for net proceeds from sale of shares and cost of
shares redeemed, respectively, since shares are recorded at $1.00
per share.
4. Capital Loss Carryforward:
At March 31, 1994, the Fund had a net capital loss carryforward
of approximately $4,537,000, of which $2,969,000 expires in 1997,
$1,358,000 expires in 1998, and $210,000 expires in 1999, which
will be available to offset like amounts of any future taxable
gains.
<AUDIT-REPORT>
CMA TAX-EXEMPT FUND
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
CMA Tax-Exempt Fund:
<PAGE>
We have audited the accompanying statement of assets and liabil-
ities, including the schedule of investments, of CMA Tax-Exempt
Fund as of March 31, 1994, the related statements of operations
for the year then ended and changes in net assets for each of the
years in the two-year period then ended, and the financial high-
lights for each of the years in the five-year period then ended.
These financial statements and the financial highlights are the
responsibility of the Fund's management. Our responsibility is
to express an opinion on these financial statements and the fin-
ancial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements and the financial highlights are free of
material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of
securities owned at March 31, 1994 by correspondence with the
custodian and brokers. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial state-
ment presentation. We believe that our audits provide a reason-
able basis for our opinion.
In our opinion, such financial statements and financial high-
lights present fairly, in all material respects, the financial
position of CMA Tax-Exempt Fund as of March 31, 1994, the results
of its operations, the changes in its net assets, and the finan-
cial highlights for the respective stated years in conformity
with generally accepted accounting principles.
Deloitte & Touche
Princeton, New Jersey
April 29, 1994
</AUDIT-REPORT>
