CMA
CMA Tax-Exempt Fund
Semi-Annual Report
September 30, 1995
MERRILL LYNCH BULL LOGO
<PAGE>
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, MA 02101
Transfer Agent
Merrill Lynch Financial Data Services, Inc.
4800 Deer Lake Drive East
Jacksonville, FL 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 Fun unless accompanied
or preceded by the Fund's current prospectus. Past performance
results shown in this report should not be considered a
representation of future performance, which will fluctuate. The Fund
seeks to maintain a consistent $1.00 net asset value per share,
although this cannot 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 six-month period ended September 30, 1995, CMA Tax-Exempt
Fund paid shareholders a net annualized yield of 3.42%*. As of
September 30, the Fund's 7-day yield was 3.62%.
The Environment
After losing momentum through the second calendar quarter of 1995,
it now appears that the US economy has resumed a moderate growth
trend. Gross domestic product growth for the three months ended June
30 was revised to show that the economy expanded at a 1.1% pace,
rather than the 0.5% rate that was originally reported. The
employment report for August exceeded consensus expectations,
although most of the new jobs created were in the service sector,
reflecting the ongoing sluggishness in manufacturing. However,
durable goods orders rebounded somewhat in August, supported by
stronger automobile sales. Reflecting the trend of renewed economic
growth--and continued containment of inflationary pressures--the
Federal Reserve Board signaled no shift in monetary policy following
its September meeting.
One of the major developments during the latter part of the period
under review was the strengthening of the US dollar relative to the
yen and the Deutschemark. Improving interest rate differentials
favoring the US currency, combined with coordinated central bank
intervention and more positive investor sentiment, have helped to
bolster the dollar in foreign exchange markets. Other factors that
appear to be improving the US dollar's outlook in the near term are
a pick-up in capital flows to the United States and the prospect of
increased capital outflows from Japan. However, it remains to be
seen if the US dollar's strengthening trend can continue without
significant improvements in the US budget and trade deficits.
<PAGE>
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
In the weeks ahead, investor interest will continue to focus on US
economic activity. Clear signs of a moderate, noninflationary
expansion could further benefit the US stock and bond markets. In
addition, should the current Federal budget deficit reduction
efforts now underway in Washington prove successful, the
implications would likely be positive for the US financial markets.
Investment Outlook & Strategy
Short-term interest rates continued to fall relatively unabated
during the six-month period ended September 30, 1995, as they have
since late 1994. Economic data releases indicated that the severely
restrictive monetary policy undertaken by the Federal Reserve Board
in 1994 had moderated the growth of the US economy. Additionally,
the news on inflation continued to be overwhelmingly favorable which
provided the backdrop for a falling interest rate environment.
Investors began to anticipate that the Federal Reserve Board would
eventually have to begin cutting interest rates to avoid the
possibility of a recession in the US economy. In fact, on July 6,
1995, the Federal Reserve Board cut its key interest rate by 25
basis points to 5.75% confirming that an economic switch had
occurred and signaling a change in monetary policy from a
restrictive to a more neutral stance. This series of events provided
the impetus for the shape of the yield curve to become flatter over
the course of the six-month period. For instance, while yields on
three-month US Treasury bills fell approximately 45 basis points for
the period, the yield on one-year US Treasury bills dropped nearly
95 basis points during the same period.
Yields on short-term municipal securities fell dramatically for the
six-month period ended September 30, 1995, as demand, especially
from tax-exempt money funds, remained strong. Assets in the tax-
exempt money market industry rose approximately $7 billion from
$115.8 billion at the start of the September period to approximately
$122 billion by September 30, 1995. This dramatic increase to an all-
time high occurred despite the effect of tax time in April when
funds traditionally lose between 5%--10% of their assets as
investors pay yearly tax bills. Much of this increase in the
industry resulted from the tremendous amount of municipal securities
that were redeemed in June and July because of maturities, bond
calls and defeasance, as well as dividend payments that occurred.
The September period traditionally represents the heaviest new-issue
supply in the short-term tax-exempt market.
<PAGE>
During the six-month period ended September 30, 1995, $25.7 billion
was brought to market, an 82% increase from the $14.8 billion
brought to market in the previous six-month period. These factors,
together with a favorable interest rate environment in the US
Treasury market, caused interest rates on short-term municipal
securities to fall. Short-term municipal bonds, like their taxable
counterparts, also experienced a flattening yield curve. Seven-day
variable rate demand notes fell only 15 basis points--20 basis
points while one-year tax-exempt notes fell approximately 60 basis
points for the September period.
After increasing the average portfolio maturity of CMA Tax-Exempt
Fund to the 50-day range from the 30-day range at the outset of the
September period, we maintained this relatively neutral investment
stance for the remainder of the six-month period because of the
flatness of the yield curve. In such an environment, investors do
not receive any additional yield premium as a reward for extending
their maturity risk. We anticipate increasing this average portfolio
maturity during the upcoming months as we enter a period of modest
new issuance and prepare for the traditional inflow of assets at the
beginning of the new year. We continue to work closely with our
credit department to seek to maintain a high quality portfolio.
Sincerely,
(Arthur Zeikel)
Arthur Zeikel
President
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Peter J. Hayes)
Peter J. Hayes
Vice President and Portfolio Manager
November 2, 1995
<PAGE>
We are pleased to announce that Peter J. Hayes is responsible for
the day-to-day management of CMA Tax-Exempt Fund. Mr. Hayes has been
employed by Merrill Lynch Asset Management, L.P. since 1987 as Vice
President and Senior Portfolio Manager. Prior thereto, Mr. Hayes was
employed by Shawmut Bank, N.A. in Boston, Massachusetts as Assistant
Vice President in Tax-Exempt Trading.
Portfolio Abbreviations for CMA Tax-Exempt Fund
ACES SM Adjustable Convertible Extendable Securities
AMT Alternative Minimum Tax (subject to)
BAN Bond Anticipation Notes
COP Certificates of Participation
CP Commercial Paper
DATES Daily Adjustable Tax-Exempt Securities
EDA Economic Development Authority
GO General Obligation Bonds
HFA Housing Finance Agency
IDA Industrial Development Authority
IDB Industrial Development Board
IDR Industrial Development Revenue Bonds
LIBOR London Interbank Offered Rate
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
UPDATES Unit Priced Adjustable Tax-Exempt Securities
UT Unlimited Tax
VRDN Variable Rate Demand Notes
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Alabama-- $ 25,000 Birmingham, Alabama, Medical Clinic Board Revenue Bonds (U.A.H.S.F.),
1.5% VRDN, 4.70% due 12/01/2026 (a) $ 25,000
9,800 Decatur, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Amoco
Chemical Co. Project), VRDN, AMT, 4.60% due 5/01/2025 (a) 9,800
20,000 Jefferson County, Alabama, Sewer Revenue Warrants, VRDN, Series A,
4.45% due 9/01/2025 (a) 20,000
7,600 McIntosh, Alabama, IDB, PCR (Ciba-Geigy Corporation Project), VRDN,
Series A, 4.40% due 12/01/2003 (a) 7,600
37,900 McIntosh, Alabama, IDB Solid Waste Disposal Revenue Bonds
(Ciba-Geigy Corporation Project), VRDN, 4.35% due 7/01/2004 (a) 37,900
11,600 Mobile, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project), VRDN,
4.55% due 6/01/2015 (a) 11,600
Alaska--3.2% 105,000 Alaska Housing Finance Corporation Revenue Bonds, VRDN, Series A, 4.30%
due 12/01/2024 (a) 105,000
10,650 Alaska Industrial Development Authority, IDR, Refunding
(Pacific Corp. Project), VRDN, 4.40% due 12/01/1995 (a) 10,650
Valdez, Alaska, Marine Terminal Revenue Refunding Bonds:
16,300 (Arco Transportation Project), CP, Series A, 3.40% due 10/06/1995 16,300
60,000 (Exxon Pipeline Co. Project), VRDN, Series B, 4.40% due 12/01/2033 (a) 60,000
29,000 (Exxon Pipeline Co. Project), VRDN, Series C, 4.40% due 12/01/2033 (a) 29,000
20,000 (Exxon Pipeline Co. Project), VRDN, Series A, 4.40% due 12/01/2033 (a) 20,000
Arizona-- 26,300 Apache County, Arizona, IDA, IDR (Tucson Electric Power Co.), VRDN, Series B,
2.6% 4.45% due 12/15/2018 (a) 26,300
10,200 Arizona Educational Loan Marketing Revenue Bonds, VRDN, AMT, Series A,
4.50% due 3/01/2015 (a) 10,200
8,000 Coconino County, Arizona, Revenue Bonds (Arizona Public Service Co.--
Navajo Project), VRDN, Series A, 4.65% due 10/01/2029 (a) 8,000
5,300 Maricopa County, Arizona, IDA, Hospital Facilities Revenue Bonds (Samaritan
Health Service Hospital), VRDN, Series B-2, 4.50% due 12/01/2008 (a) (c) 5,300
1,100 Maricopa County, Arizona, IDA, PCR (Motorola Inc. Project), VRDN, 4.30%
due 10/01/1995 (a) 1,100
Maricopa County, Arizona, PCR (Arizona Public Service Co.), VRDN (a):
38,800 Series A, 4.50% due 5/01/2029 38,800
25,600 Series C, 4.55% due 5/01/2029 25,600
14,800 Series D, 4.50% due 5/01/2029 14,800
11,200 Series E, 4.50% due 5/01/2029 11,200
13,200 Series F, 4.65% due 5/01/2029 13,200
21,500 Maricopa County, Arizona, PCR (El Paso Electric Co. Project),
VRDN, Series A, 4.55% due 7/01/2014 (a) 21,500
20,750 Salt River Project, Arizona, Agricultural Improvement and Power
District, Electric System Revenue Bonds, CP, 3.80% due 12/13/1995 20,750
Arkansas-- 3,800 Arkansas State Student Loan Authority Revenue Bonds, VRDN, AMT, Series
0.3% B-4, 4.55% due 6/01/2013 (a) 3,800
19,000 Little River County, Arkansas, Solid Waste Disposal Revenue Bonds
(Nekoosa Papers Incorporated Project), VRDN, AMT, 4.55% due 2/01/2025 (a) 19,000
<PAGE>
California-- 40,000 California Higher Education Loan Authority, Inc., Student Loan Revenue
7.0% Bonds, AMT, Series C, 4.10% due 6/01/1996 40,000
California Higher Education Loan Authority, Inc., Student Loan Revenue
Refunding Bonds:
20,000 AMT, Series A, 4.10% due 6/01/1996 20,000
10,000 Senior Lien, Series A-1, 3.90% due 7/01/1996 10,000
33,750 Series A, 4.35% due 5/01/1996 33,750
33,000 VRDN, AMT, Series E-1, 4.50% due 12/01/2022 (a) 33,000
5,700 California Pollution Control Financing Authority, PCR (Southern
California Edison), VRDN, Series D, 4.35% due 2/28/2008 (a) 5,700
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
California $ 4,600 California Pollution Control Financing Authority, Solid Waste Disposal
(concluded) Revenue Bonds (Shell Oil Co.--Martinez Project), VRDN, AMT,
Series A, 4.55% due 10/01/2024 (a) $ 4,600
50,000 California Public Capital Improvement Finance Authority Revenue
Bonds (Pooled Project), VRDN, Series D, 3.80% due 6/01/2028 (a) 50,000
275,400 California State, RAW, Series C, 5.75% due 4/25/1996 277,069
17,700 Eastern Municipal Water District, California, Water and Sewer Revenue
Refunding Bonds, VRDN, COP, Series B, 4.20% due 7/01/2020 (a) 17,700
21,000 Los Angeles County, California, Metropolitan Transportation Authority,
Sales Tax Revenue Refunding Bonds, VRDN, Series A, 4.20% due
7/01/2020 (a) (c) 21,000
17,100 Southern California Public Power Authority, Revenue Refunding Bonds
(Southern Transmission Project), 4% due 7/01/2019 (a) (e) 17,100
Colorado-- 6,800 Colorado Health Facilities Authority Revenue Bonds (North Colorado
0.6% Medical Center), VRDN, 4.40% due 5/15/2020 (a) 6,800
1,300 Colorado Housing Finance Authority, M/F Revenue Bonds (Central Park--
Coven and Greenwood), VRDN, 4.35% due 5/01/1997 (a) 1,300
Denver, Colorado, City and County Airport Revenue Bonds, VRDN, AMT (a):
10,500 Series F, 4.50% due 11/15/2025 10,500
11,500 Series G, 4.50% due 11/15/2025 11,500
4,755 Moffat County, Colorado, PCR, Refunding (Pacific Corporation Project),
VRDN, 4.50% due 5/01/2013 (a) (e) 4,755
3,800 Pitkin County, Colorado, IDR, Refunding (Aspen Skiing Co. Project),
VRDN, Series A, 4.55% due 4/01/2016 (a) 3,800
8,000 Westminster, Colorado, IDR, Refunding (Ball Corp. Project), VRDN, 4.30%
due 6/01/2005 (a) 8,000
<PAGE>
Connecticut-- Connecticut State Economic Recovery Notes:
0.4% 15,000 Series A, 5.40% due 12/15/1995 15,026
1,400 VRDN, Series B, 4.35% due 6/01/1996 (a) 1,400
1,800 Connecticut State Special Tax Obligation Revenue Bonds, Second Lien,
VRDN, Series 1, 4.20% due 12/01/2010 (a) 1,800
16,200 Eagle Tax-Exempt Trust, Connecticut, VRDN, 4.49% due 8/15/2012 (a) 16,200
Delaware-- Delaware State, EDA, Revenue Bonds (Delmarva Power & Light Co. Project),
0.1% VRDN, AMT (a):
4,400 4.75% due 10/01/2017 4,400
2,100 Series A, 4.75% due 10/01/2017 2,100
District of 2,300 District of Columbia, General Fund Recovery Bonds, VRDN, UT, Series B-3,
Columbia--0.8% 5% due 6/01/2003 (a) 2,300
17,800 District of Columbia, Hospital Revenue Bonds (Providence Hospital--Daughters
of Charity), VRDN, Series 89-A, 4.45% due 12/01/2019 (a) 17,800
12,500 District of Columbia, Revenue Bonds (George Washington University),
VRDN, Series A, 4.40% due 3/01/2006 (a) 12,500
26,700 Eagle Tax-Exempt Trust, District of Columbia, VRDN, Series 1994-A, 4.49%
due 6/01/2005 (a) 26,700
Florida-- 3,400 Broward County, Florida, HFA, M/F Housing Revenue Bonds (Margate
2.5% Investment Projects), VRDN, 4.15% due 11/01/2005 (a) 3,400
37,425 Dade County, Florida, Aviation Revenue Refunding Bonds, VRDN, Series V,
4.20% due 10/01/2007 (a) 37,425
11,700 Dade County, Florida, IDA, Revenue Refunding Bonds
(Florida Power & Lighting Co.), VRDN, 4.50% due 6/01/2021 (a) 11,700
Dade County, Florida, Solid Waste Authority, IDR (Montenay--Dade Limited
Project), VRDN (a):
15,405 AMT, 4.60% due 12/01/2010 15,405
700 Series A, 4.60% due 12/01/2013 700
8,100 Dade County, Florida, Special Obligation, Capital Asset Acquisition
Revenue Bonds, VRDN, 4.55% due 10/01/2010 (a) 8,100
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Florida $ 25,000 Florida State Turnpike Authority, Turnpike Revenue Bonds, Series A,
(concluded) 3.85% due 12/01/1995 $ 25,000
Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric
Company Project), VRDN (a):
900 4.50% due 5/15/2018 900
6,300 4.50% due 9/01/2025 6,300
9,010 Manatee County, Florida, PCR, Refunding (Florida Power & Lighting Co.
Project), VRDN, 4.55% due 9/01/2024 (a) 9,010
7,000 Martin County, Florida, PCR, Refunding (Florida Power & Lighting Co.
Project), VRDN, 4.55% due 9/01/2024 (a) 7,000
15,000 Palm Beach County, Florida, School District Revenue Bonds, TAN, 4.50%
due 9/27/1996 15,099
900 Pinellas County, Florida, Health Facilities Authority, Revenue Refunding
Bonds (Pooled Hospital Loan Program), VRDN, 4.60% due 12/01/2015 (a) 900
Saint Lucie County, Florida, PCR, Refunding (Florida Power & Lighting Co.
Project):
21,500 CP, Series A, 3.75% due 12/11/1995 21,500
18,900 VRDN, 4.55% due 1/01/2026 (a) 18,900
4,900 Saint Lucie County, Florida, Solid Waste Disposal Revenue Bonds (Florida
Power & Lighting Co. Project), VRDN, AMT, 4.60% due 1/01/2027 (a) 4,900
6,860 Volusia County, Florida, Health Facilities Authority Revenue Bonds
(Pooled Hospital Loan Program), ACES, 4.30% due 11/01/2015 (a)(f) 6,860
Georgia-- Burke County, Georgia, Development Authority, PCR (Georgia Power
2.5% Company--Plant Vogtle Project), VRDN (a):
30,100 2nd Series, 4.55% due 4/01/2025 30,100
4,300 3rd Series, 4.45% due 7/01/2024 4,300
4,500 4th Series, 4.50% due 7/01/2024 4,500
22,400 Eagle Tax-Exempt Trust, Georgia, VRDN, Series 1994-B, 4.49% due
1/04/2004 (a) 22,400
35,845 Fulton County, Georgia, TAN, 4.75% due 12/29/1995 35,888
8,945 Georgia Municipal Association, Pooled Bonds, COP, VRDN, 4.40% due
12/15/2020 (a) 8,945
11,890 Georgia State Residential Finance Authority, Home Ownership Mortgage
Revenue Bonds, Series A, 4.10% due 12/01/1995 (d) 11,890
5,855 Georgia State Residential Finance Authority, S/F Industrial Mortgage
Revenue Bonds, Series A, 4.10% due 12/01/1995 (d) 5,855
12,200 Hapeville, Georgia, Development Authority, IDR (Hapeville Hotel Ltd.),
VRDN, 4.50% due 11/01/2015 (a) 12,200
7,600 Monroe County, Georgia, Development Authority, PCR (Georgia Power Co.),
VRDN, 1st Series, 4.55% due 7/01/2025 (a) 7,600
20,575 Municipal Electric Authority, Georgia, General Resolution Revenue Bonds,
Series B, 4.25% due 6/01/1996 20,605
25,150 Municipal Electric Authority, Georgia, Money Market Municipal Bonds
(Project 1), CP, Series B, 3.75% due 11/01/1995 25,150
Idaho--0.1% 7,500 Custer County, Idaho, PCR (Amoco Project), 4.20% due 10/01/2009 7,500
<PAGE>
Illinois-- Chicago, Illinois, O'Hare International Airport Revenue Bonds (General
12.1% Airport Second Lien):
7,000 Series B, 3.80% due 1/01/1996 7,000
20,700 VRDN, Series C, 4.40% due 1/01/2018 (a) 20,700
14,800 Chicago, Illinois, O'Hare International Airport, Special Facilities
Revenue Bonds (Compagnie Nationale, Air France), VRDN, 4.50%
due 5/01/2018 (a) 14,800
Chicago, Illinois, Tender Notes:
25,000 CP, Series A-2, 3.50% due 10/31/1995 25,000
35,000 CP, Series C, 4.20% due 11/16/1995 35,000
35,000 CP, Series C-1, 4.25% due 11/16/1995 35,000
37,000 Series A-1, 3.10% due 10/31/1995 36,987
74,900 VRDN, Series B, 4.35% due 10/31/1995 (a) 74,900
23,600 VRDN, Series B, 4.40% due 1/01/2012 (a) 23,600
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Illinois $ 25,000 Cook County, Illinois, Tender Notes (Capital Equipment), VRDN,
(concluded) Series A, 4.40% due 3/01/2000 (a) $ 25,000
13,800 Eagle Tax-Exempt Trust, Illinois, VRDN, Series 1995,
4.49% due 1/01/2024 (a) 13,800
Illinois Development Finance Authority, VRDN (a):
36,200 PCR, Refunding (Commonwealth Edison Company Project), Series B, 4.30%
due 10/15/2014 36,200
37,100 Revenue Bonds (Lyric Opera Chicago Project), 4.30% due 12/01/2028 37,100
8,860 Revenue Bonds (Residential Rental--River Oaks Project), AMT, 4.50% due
12/15/2019 8,860
Illinois Educational Facilities Authority Revenue Bonds, VRDN (a):
16,300 (Art Institute of Chicago), 4.40% due 3/01/2027 16,300
5,200 (Chicago Historical Society), 4.30% due 12/01/2025 5,200
7,500 (Cultural Pooled Financing Program), 4.45% due 12/01/2025 7,500
15,200 (Illinois Institute of Technology), Series A, 4.30% due 9/01/2025 15,200
Illinois Health Facilities Authority Revenue Bonds:
39,900 (Evangelical Hospital Corporation), VRDN, Series A, 4.25%
due 1/01/2010 (a) 39,900
15,100 (Highland Park Hospital), VRDN, Series B, 4% due 10/01/2012 (a) 15,100
8,700 (Hospital Sisters Services, Inc.), VRDN, Series E, 4.25%
due 12/01/2014 (a) 8,700
20,000 (Lutheran Institute), VRDN, Series C, 3.75% due 4/01/2015 (a) 20,000
22,800 (Northwest Community Hospital), VRDN, 4.50% due 7/01/2025 (a) 22,800
6,200 (Resurrection Health Care System), VRDN, 4.55% due 5/01/2011 (a) 6,200
7,000 (Revolving Fund, Pooled Financing Program), VRDN, Series F, 4.30%
due 8/01/2015 (a) 7,000
Illinois Health Facilities Authority Revenue Bonds (Evanston Hospital
Corporation Project):
10,000 CP, 4.30% due 2/29/1996 10,000
25,000 CP, 4% due 5/15/1996 25,000
30,000 CP, Series A, 4% due 1/31/1996 30,000
10,000 Series A, 4.80% due 11/30/1995 10,000
10,000 Series B, 4.80% due 11/30/1995 10,000
33,000 Series B, 4.65% due 2/15/1996 33,000
10,000 Series C, 4.80% due 11/30/1995 10,000
10,000 Series D, 4.80% due 11/30/1995 10,000
2,600 Series E, 4.80% due 11/30/1995 2,600
Illinois State, GO, RAN:
75,000 4.50% due 4/12/1996 75,305
84,800 4.50% due 5/10/1996 85,139
Illinois State Toll Highway Authority Revenue Bonds
(Toll Highway Priority):
12,750 7.375% due 1/01/1996 (b) 13,093
31,200 Refunding, VRDN, Series B, 4.30% due 1/01/2010 (a) 31,200
10,000 Illinois State, VRDN, 4.44% due 7/01/2020 (a) 10,000
<PAGE>
Indiana-- Fort Wayne, Indiana, Hospital Authority Revenue Bonds
3.0% (Parkview Memorial Hospital), VRDN (a):
1,645 Series B, 4.60% due 1/01/2016 1,645
2,700 Series B, 4.60% due 1/01/2020 2,700
3,505 Series C, 4.60% due 1/01/2016 3,505
5,670 Series D, 4.60% due 1/01/2016 5,670
30,000 Indiana Bond Bank, Advance Funding Notes, VRDN, Series A-3, 3.995%
due 1/10/1996 (a) 30,000
Indiana Health Facilities Financing Authority, Hospital
Revenue Bonds, ACES (a):
5,400 (Daughters of Charity National Health System), Series A, 4.45%
due 11/01/2022 5,400
1,700 (Daughters of Charity National Health System), Series B, 4.45%
due 11/01/2022 1,700
7,900 (Methodist Hosptial of Indiana, Inc.), Series B, 4.30% due 9/01/2022 7,900
34,200 (Methodist Hospital of Indiana, Inc.), Series C, 4.30% due 9/01/2022 34,200
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Indiana Indiana Secondary Market Educational Loans Incorporated, Student Loan
(concluded) Revenue Bonds, VRDN, AMT, Series B (a):
$ 26,900 4.50% due 12/01/2013 $ 26,900
22,500 4.50% due 12/01/2014 22,500
Indianapolis, Indiana, Local Public Improvement Bond Bank Notes:
8,600 Series A, 4.25% due 1/11/1996 8,618
7,000 Series B, 4.25% due 1/11/1996 7,015
14,900 Jasper County, Indiana, PCR, Refunding (Northern Indiana Public
Service Co.), VRDN, Series C, 4.50% due 4/01/2019 (a) 14,900
47,065 Marion County, Indiana, Hospital Authority, Hospital Facility Revenue
Bonds (Saint Vincent's Hospital and Healthcare Center--Daughters of
Charity--Stress Center, Inc.), VRDN, 4.45% due 11/01/2013 (a) 47,065
5,000 Purdue University, Indiana, University Revenue Bonds, VRDN, Series K,
4.20% due 7/01/2020 (a) 5,000
<PAGE>
Iowa--1.0% 5,000 Chillicothe, Iowa, PCR, Refunding (Iowa-Illinois Gas & Electric Project),
VRDN, 4.30% due 1/01/2023 (a) 5,000
Iowa Finance Authority, Solid Waste Disposal Revenue Bonds (Cedar River
Paper Company Project), VRDN, Series A (a):
27,600 4.65% due 7/01/2023 27,600
6,800 AMT, 4.65% due 6/01/2024 6,800
20,500 AMT, 4.65% due 5/01/2025 20,500
3,700 Iowa Higher Education Loan Authority Revenue Bonds (Private College
Facilities), VRDN, 4.30% due 12/01/2015 (a) 3,700
14,500 Iowa Student Loan Liquidity Corporation, Student Loan Revenue Bonds,
VRDN, AMT, Series B, 4.40% due 12/01/2013 (a) (e) 14,500
Kansas--0.3% 3,000 Kansas State, Department of Transportation, Highway Revenue Bonds, VRDN,
Series B, 4.45% due 9/01/2014 (a) 3,000
Wichita, Kansas, Hospital Revenue Bonds (CSJ Health Systems), VRDN (a):
1,600 4.40% due 10/01/2002 1,600
15,300 4.40% due 10/01/2008 15,300
Kentucky-- 5,100 Ashland, Kentucky, PCR (Merck & Co./Calgon Carbon Project), VRDN, 4.65%
1.1% due 10/01/2006 (a) 5,100
22,700 Carroll County, Kentucky, Solid Waste Disposal Facilities Revenue Bonds
(Kentucky Utilities Co. Project), VRDN, AMT, Series A, 4.60% due
11/01/2024 (a) 22,700
Davies County, Kentucky, Solid Waste Disposal Facilities Revenue Bonds
(Scott Paper Co. Project), VRDN, AMT (a):
28,200 Series A, 4.60% due 12/01/2023 28,200
14,500 Series B, 4.65% due 12/01/2023 14,500
4,500 Series B, 4.65% due 5/01/2024 4,500
8,600 Kentucky Economic Development Finance Authority Revenue Bonds (Sisters
of Charity), VRDN, 4.50% due 11/01/2020 (a) 8,600
Louisiana-- 27,300 Calcasieu Parish Inc., Louisiana, IDB, Environmental Revenue Refunding
3.2% Bonds (Citgo Petroleum Corporation), VRDN, 4.60% due 3/01/2025 (a) 27,300
8,800 Eagle Tax-Exempt Trust, Louisiana, VRDN, Series 94, Class 3803, 4.49%
due 5/01/2008 (a) 8,800
3,600 East Baton Rouge Parish, Louisiana, PCR, Refunding (Exxon Project),
VRDN, 4.55% due 3/01/2022 (a) 3,600
5,200 Louisiana Public Facilities Authority, Hospital Revenue Bonds (Hospital
Equipment Financing and Refunding Program), VRDN, Series A, 4.70% due
12/01/2005 (a) 5,200
Louisiana State Offshore Terminal Authority, Deepwater Port Revenue
Refunding Bonds (Loop Inc.--First Stage), VRDN (a):
11,500 4.40% due 9/01/2006 11,500
12,485 Series A, 4.50% due 9/01/2008 12,485
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Louisiana $ 10,200 Plaquemines Parish, Louisiana, Environmental Revenue Bonds (BP
(concluded) Exploration & Oil), VRDN, AMT, 4.65% due 10/01/2024 (a) $ 10,200
Saint Charles Parish, Louisiana, PCR, VRDN (a):
17,100 (Shell Oil Company--Norco Project), AMT, 4.60% due 11/01/2021 17,100
4,400 (Shell Oil Company Project), 4.20% due 6/01/2005 4,400
13,600 (Shell Oil Company Project), AMT, Series A, 4.60% due 10/01/2022 13,600
Saint James Parish, Louisiana, PCR, Refunding (Texas Project), CP:
82,030 Series A, 3.60% due 10/10/1995 82,030
43,900 Series B, 3.60% due 10/10/1995 43,900
Maine--0.0% Maine Health and Higher Educational Facilities Authority Revenue Bonds
(VHA New England Inc.), VRDN (a) (e):
1,250 Series B, 4.20% due 12/01/2025 1,250
1,450 Series F, 4.20% due 12/01/2025 1,450
Maryland-- 35,700 Baltimore, Maryland, Port Facilities Revenue Bonds (Occidental
1.0% Petroleum), VRDN, 3.75% due 10/14/2011 (a) 35,700
Maryland State Health and Higher Educational Facilities Authority
Revenue Bonds, VRDN (a):
12,300 (Pooled Loan Program), Series A, 4.35% due 4/01/2035 12,300
24,600 (Saint Agnes Hospital--Daughters of Charity), 4.45% due 7/01/2013 24,600
Massachusetts-- 32,130 Clipper Tax-Exempt Trust, Massachusetts, VRDN, Class A, 4.22%
2.6% due 10/17/2002 (a) 32,130
Eagle Tax-Exempt Trust, Massachusetts, VRDN (a):
25,000 4.49% due 10/01/2007 25,000
20,900 Series J, 4.49% due 8/01/2005 20,900
101,200 Massachusetts Bay Transportation Authority Notes, Series B, 4.75%
due 9/06/1996 101,863
11,100 Massachusetts State HFA, S/F Housing, Convertible Option Revenue Bonds,
Series 35, 4.10% due 6/01/1996 11,100
2,000 Massachusetts State, Municipal Wholesale Electric Company, Power Supply
System Revenue Bonds, VRDN, Series C, 4.15% due 7/01/2019 (a) 2,000
1,000 Massachusetts State, UPDATES, Series E, 4.45% due 12/01/1997 (a) 1,000
<PAGE>
Michigan-- 6,500 Delta County, Michigan, Economic Development Corporation, Environmental
2.2% Improvement Revenue Refunding Bonds (Mead Escambia Paper),
VRDN, Series D, 4.65% due 12/01/2023 (a) 6,500
15,000 Detroit, Michigan, City School District Revenue Bonds (State School
Aid Notes), 4.50% due 5/01/1996 15,056
17,700 Eagle Tax-Exempt Trust, Michigan, VRDN, Series 1994, Class 2201, 3.90%
due 6/01/2021 (a) 17,700
17,400 Grand Rapids, Michigan, Water Supply System, Revenue Refunding Bonds,
VRDN, 4.40% due 1/01/2020 (a) 17,400
100 Kent Hospital Finance Authority, Michigan, Hospital Facilities Revenue
Bonds (Butterworth Hospital), VRDN, Series A, 4.45% due 1/15/2020 (a) 100
Michigan State Hospital Finance Authority Revenue Bonds, VRDN (a):
4,300 (Providence Hospital--Daughters of Charity Systems, Incorporated), 4.45%
due 11/01/2014 4,300
14,000 (Saint Mary's Hospital--Daughters of Charity Systems, Incorporated),
4.45% due 11/01/2013 14,000
5,000 Michigan State Strategic Fund, Limited Obligation Revenue Refunding
Bonds (Consumers Power Company Project), VRDN, Series A, 4.45%
due 6/15/2010 (a) 5,000
6,600 Michigan State Strategic Fund, PCR, Refunding (Consumers Power Project),
VRDN, Series A, 4.45% due 4/15/2018 (a) 6,600
1,000 Michigan State Strategic Fund, Solid Waste Disposal Revenue Bonds
(Grayling Generating Project), VRDN, AMT, 4.50% due 1/01/2014 (a) 1,000
9,000 Michigan State Underground Storage Tank, Final Assurance Authority
Revenue Bonds, VRDN, Series I, 4.35% due 12/01/2004 (a) 9,000
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Michigan University of Michigan, University Hospital Revenue Bonds, VRDN (a):
(concluded) $ 8,000 4.50% due 12/01/2027 $ 8,000
53,500 (Medical Service Plan), 4.50% due 12/01/2027 53,500
9,800 Refunding, 4.50% due 12/01/2019 9,800
Minnesota-- Eagle Tax-Exempt Trust, Minnesota, VRDN (a):
0.8% 14,300 Series 1994-C-5, 4.49% due 2/01/2015 14,300
45,000 Series A, 4.49% due 8/01/2006 45,000
Mississippi-- 10,000 Harrison County, Mississippi, PCR, Refunding (E.I. du Pont de Nemours & Co.),
1.4% VRDN, 4.50% due 9/01/2010 (a) 10,000
Jackson County, Mississippi, PCR, Refunding (Chevron USA, Inc. Project),
VRDN (a):
7,900 4.40% due 12/01/2016 7,900
26,250 4.40% due 6/01/2023 26,250
600 Jackson County, Mississippi, Port Facility Revenue Refunding Bonds
(Chevron USA, Inc. Project), VRDN, 4.45% due 6/01/2023 (a) 600
3,000 Mississippi Hospital Equipment and Facilities Authority Revenue Bonds
(Mississippi Baptist Medical Center), VRDN, Series B, 4.50%
due 7/01/2012 (a) 3,000
58,200 Perry County, Mississippi, PCR, Refunding (Leaf River Forest Project),
VRDN, 4.45% due 3/01/2002 (a) 58,200
<PAGE>
Missouri-- 30,000 Eagle Tax-Exempt Trust, Missouri, VRDN, Series 1993-E, 4.49%
2.5% due 8/01/2006 (a) 30,000
Missouri Higher Education Loan Authority, Student Loan Revenue Bonds,
VRDN, AMT (a):
7,800 Series A, 4.50% due 6/01/2017 7,800
11,700 Series B, 4.50% 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, 4.20% due 6/01/2019 5,000
15,500 Series C, 4.20% due 6/01/2019 15,500
6,200 Series D, 4.20% due 6/01/2019 6,200
Missouri State Health and Educational Facilities Authority Revenue Bonds
(Washington University Project), VRDN (a):
1,200 Series A, 4.10% due 9/01/2010 1,200
12,530 Series A, 4.65% due 3/01/2017 12,530
19,200 Series B, 4.65% due 3/01/2017 19,200
28,700 Saint Louis County, Missouri, IDA, Hospital Revenue Bonds (DePaul Hospital--
Daughters of Charity), VRDN, 4.45% due 11/01/2014 (a) 28,700
50,000 University of Missouri, Capital Projects Notes, Series FY 1995-96, 4.75%
due 6/28/1996 50,360
Montana-- 7,000 Billings, Montana, M/F Housing Revenue Bonds (West Park Retirement
0.1% Center), VRDN, 4.35% due 12/01/2007 (a) 7,000
Nebraska-- Nebraska Higher Education Loan Program, Multiple Mode Student Loan
1.1% Revenue Bonds, VRDN (a) (c):
12,800 Series A, 4.35% due 12/01/2015 12,800
13,600 Series B, 4.35% due 12/01/2015 13,600
3,100 Series C, 4.35% due 12/01/2015 3,100
17,600 Series D, 4.35% due 12/01/2015 17,600
Nebraska Higher Education Loan Program, Student Loan Revenue Bonds,
VRDN, AMT (a):
3,550 Series A, 4.45% due 12/01/2016 3,550
30,150 Series C, 4.45% due 8/01/2018 30,150
Nevada--0.4% 29,300 Clark County, Nevada, Airport Improvement Revenue Refunding Bonds,
Series A, VRDN, 4.35% due 7/01/2012 (a) 29,300
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
New Hampshire-- $ 1,400 New Hampshire Higher Educational and Health Facilities Authority Revenue
0.5% Bonds (VHA New England Inc.), VRDN, Series D, 4.20% due 12/01/2025 (a) (e) $ 1,400
38,400 New Hampshire State, Business Finance Authority, PCR, Refunding (Public
Service Co.), VRDN, Series E, 4.50% due 5/01/2021 (a) 38,400
New Jersey-- 8,000 Jersey City, New Jersey, BAN, GO, 4.75% due 9/27/1996 8,051
0.1%
New Mexico-- Farmington, New Mexico, PCR (Arizona Public Service Co.), VRDN (a):
1.5% 5,800 AMT, Series C, 4.60% due 9/01/2024 5,800
49,400 Series A, 4.55% due 5/01/2024 49,400
48,500 Series B, 4.40% due 9/01/2024 48,500
5,000 Hurley, New Mexico, PCR (Kennecott Santa Fe), VRDN, 4.50%
due 12/01/2015 (a) 5,000
4,600 New Mexico Educational Assistance Foundation, Student Loan Revenue
Bonds, VRDN, AMT, Series B, 4.50% due 4/01/2005 (a) (e) 4,600
1,880 New Mexico State Hospital Equipment Loan Council, Hospital Equipment and
Improvement Revenue Bonds (Health Facilities), VRDN, 4.35%
due 5/01/2009 (a) (c) 1,880
New York-- 7,100 Eagle Tax-Exempt Trust, New York, VRDN, Series 1994-C-2, 4.49%
7.7% due 6/15/2018 (a) 7,100
Nassau County, New York:
27,590 RAN, Series A, 4.25% due 12/28/1995 27,633
40,000 TAN, Series B, 4.50% due 4/15/1996 40,128
New York City, New York, CP, Series A:
25,000 RAN, 4.50% due 4/11/1996 25,091
215,100 TAN, UT, 4.50% due 2/15/1996 215,743
New York City, New York, GO, UT, VRDN (a):
20,000 Series B, Sub-Series B-7, 4.50% due 8/15/2018 (e) 20,000
33,000 Series D, 4.20% due 2/01/2021 33,000
33,000 Series D, 4.20% due 2/01/2022 33,000
1,300 Sub-Series A-5, 4.50% due 8/01/2016 1,300
3,000 Sub-Series A-7, 4.40% due 8/01/2019 3,000
10,300 Sub-Series A-10, 4.55% due 8/01/2016 10,300
400 New York City, New York, IDA, IDR (Japan Airlines Company Ltd. Project),
VRDN, AMT, 4.70% due 11/01/2015 (a) 400
New York City, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds:
10,000 CP, Series 3, 3.70% due 10/10/1995 10,000
19,300 CP, Series 3, 3.80% due 10/11/1995 19,300
5,400 VRDN, Series A, 4.65% due 6/15/2025 (a) (f) 5,400
12,600 VRDN, Series G, 4.40% due 6/15/2024 (a) (f) 12,600
6,500 New York State Dormitory Authority Revenue Bonds (Putters-14A), VRDN,
4.30% due 7/01/2008 (a) 6,500
2,400 New York State Energy Research and Development Authority, PCR
(Niagara Mohawk Power Corporation Project), VRDN, AMT,
Series B, 4.55% due 7/01/2027 (a) 2,400
New York State Local Government Assistance Corporation Revenue Bonds,
VRDN (a):
21,700 Series B, 4.20% due 4/01/2023 21,700
18,100 Series B, 4.20% due 4/01/2025 18,100
51,400 Series F, 4.30% due 4/01/2025 51,400
900 Syracuse, New York, IDA, Civic Facility Revenue Bonds
(Syracuse University Project), VRDN, 4.55% due 3/01/2023 (a) 900
15,800 Triborough Bridge and Tunnel Authority, New York, Special Obligation
Revenue Bonds, VRDN, 4.05% due 1/01/2024 (a) 15,800
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
North Carolina-- Craven County, North Carolina, Industrial Facilities and Pollution
2.7% Control Financing Authority Revenue Bonds (Cravenwood Energy Project),
VRDN, AMT (a):
$ 6,500 Series B, 4.55% due 5/01/2011 $ 6,500
3,000 Series C, 4.55% due 5/01/2011 3,000
2,600 Halifax County, North Carolina, Industrial Facilities Pollution
Control Financing Authority Revenue Bonds (Westmoreland Project),
VRDN, 4.60% due 12/01/2019 (a) 2,600
9,995 North Carolina Eastern Municipal Power Agency, Power System Revenue
Bonds (Putters), Series 5, 4.50% due 1/01/2018 (a) 9,995
North Carolina Educational Facilities Finance Agency Revenue
Bonds, VRDN (a):
23,950 (Bowman Grey School of Medicine Project), 4.40% due 9/01/2020 23,950
20,240 (Duke University Project), Series A, 4.35% due 6/01/2027 20,240
15,000 (Duke University Project), Series B, 4.35% due 12/01/2021 15,000
North Carolina Medical Care Commission, Hospital Revenue
Bonds, VRDN (a):
5,700 (Carol Woods Project), 4.50% due 4/01/2021 5,700
1,700 (Duke University Hospital), Series B, 4.35% due 6/01/2015 1,700
2,000 (Duke University Hospital), Series C, 4.35% due 6/01/2015 2,000
26,400 (Moses H. Cone Memorial Hospital Project), 4.40% due 10/01/2023 26,400
18,500 (North Carolina Baptist Hospital Project), Series B, 4.40%
due 6/01/2022 18,500
8,600 (Pooled Financing Project), 3.90% due 4/01/2012 8,600
40,900 (Pooled Financing Project), 4.20% due 12/01/2025 (c) 40,900
5,500 (Pooled Financing Project), Series B, 4.50% due 10/01/2013 5,500
17,000 Wake County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (Carolina Power and Light Company
Project), VRDN, 4.65% due 3/01/2017 (a) 17,000
<PAGE>
Ohio--0.5% 4,600 Cuyahoga County, Ohio, Hospital Revenue Improvement Bonds (Cleveland
University Hospital), VRDN, 4.60% due 1/01/2016 (a) 4,600
10,500 Eagle Tax-Exempt Trust, Ohio, VRDN, 4.44% due 7/01/2015 (a) 10,500
1,100 Franklin County, Ohio, Health System Revenue Bonds (Franciscan
Sister--Saint Anthony Medical Center), VRDN, Series B, 4.60%
due 7/01/2015 (a) 1,100
8,100 Hamilton County, Ohio, Health Systems Revenue Bonds (Franciscan Sisters
Poor Health), VRDN, Series A, 4.60% due 3/01/2017 (a) 8,100
1,865 Ohio HFA, M/F Housing Revenue Bonds (Kenwood Congregate Retirement
Program), VRDN, 3.55% due 12/01/2015 (a) 1,865
3,000 Scioto County, Ohio, Hospital Facilities Revenue Bonds (VHA Central Inc.
Capital Asset), VRDN, Series C, 4.15% due 12/01/2025 (a) (e) 3,000
6,100 Scioto County, Ohio, Marine Terminal Facility, Revenue Refunding Bonds
(Norfolk Southern Corporation Project), VRDN, 4.20% due 8/15/2013 (a) 6,100
Oklahoma-- 12,400 Muskogee, Oklahoma, Industrial Trust, PCR, Refunding (Oklahoma Gas and
0.3% Electric Co.), VRDN, Series A, 4.40% due 1/01/2025 (a) 12,400
9,700 Oklahoma City, Oklahoma, Industrial and Cultural Facilities Revenue
Bonds, ACES, Series A, 4.70% due 6/01/2006 (a) 9,700
Oregon--1.9% 9,300 Medford, Oregon, Hospital Facilities Authority Revenue Bonds
(Gross--Rogue Valley Health Services), VRDN, 4.60% due 10/01/2016 (a) 9,300
Oregon State GO, Veterans' Welfare Bonds, VRDN (a):
53,000 Series 73-E, 4.30% due 12/01/2016 53,000
15,000 Series 73-G, 4.50% due 12/01/2018 15,000
64,300 Series 73-H, 4.40% due 12/01/2019 64,300
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Pennsylvania-- Allegheny County, Pennsylvania, Hospital Development Authority Revenue
6.2% Bonds (Presbyterian Health Center), VRDN (a):
$ 8,000 Series A, 4.40% due 3/01/2020 $ 8,000
1,400 Series C, 4.40% due 3/01/2020 1,400
Allegheny County, Pennsylvania, IDA, PCR (Duquesne Light Project),
CP, Series A:
15,000 4.40% due 12/07/1995 15,000
12,000 4.75% due 12/07/1995 12,000
2,500 Butler County, Pennsylvania, IDA, IDR, Refunding (Wetterau Finance Co.
Project), VRDN, 4.50% due 12/01/2014 (a) 2,500
21,100 Delaware County, Pennsylvania, IDA, PCR (BP Oil Inc. Project), VRDN,
4.55% due 12/01/2009 (a) 21,100
3,000 Delaware County, Pennsylvania, IDA, Solid Waste Revenue Bonds (Scott
Paper Company), VRDN, Series B, 4.50% due 12/01/2018 (a) 3,000
17,000 Eagle Tax-Exempt Trust, Pennsylvania, VRDN, Series 94, Class 3803, 4.49%
due 5/01/2008 (a) 17,000
3,800 Geisinger Authority, Pennsylvania, Health Systems Revenue Bonds,
Series B, VRDN, 4.55% due 7/01/2022 (a) 3,800
5,600 Montgomery County, Pennsylvania, Higher Education and Health Authority,
Hospital Revenue Bonds (Holy Redeemer Hospital), VRDN, 4.30%
due 9/01/2018 (a) (e) 5,600
Pennsylvania State Higher Education Assistance Agency, Student Loan
Revenue Bonds, VRDN (a):
18,800 AMT, Series A, 4.50% due 1/01/2018 18,800
84,950 AMT, Series A, 4.50% due 12/01/2024 84,950
60,000 AMT, Series B, 4.50% due 7/01/2018 (g) 60,000
54,300 Series A, 4.10% due 12/01/2000 54,300
34,900 Series C, 4.50% due 7/01/2018 (g) 34,900
30,800 Series E, 4.50% due 7/01/2018 (g) 30,800
Pennsylvania State Higher Educational Facilities Authority, College and
University Revenue Bonds, VRDN (a):
8,000 (Carnegie-Mellon University), Sub-Series A, 4.10% due 11/01/2015 8,000
2,100 (Temple University), 4.55% due 10/01/2009 2,100
Pennsylvania State Higher Educational Facilities Authority, Health
Services Revenue Bonds, VRDN:
5,225 (Putters), Series 4-B, 4.50% due 1/01/2009 (a) 5,225
15,000 (University of Pennsylvania), Series B, 4.20% due 1/01/2024 (a) 15,000
6,000 Pennsylvania State Higher Educational Facilities Authority, Revenue
Refunding Bonds (Thomas Jefferson University), ACES, Series C, 3.90%
due 3/01/1996 (a) 6,000
13,000 Pennsylvania State, VRDN, 4.49% due 5/01/2015 (a) 13,000
Philadelphia, Pennsylvania, IDA, Revenue Bonds:
10,200 (30th Street Station Project), VRDN, AMT, 4.05% due 1/01/2011 (a) (c) 10,200
8,300 (Institute for Cancer Research Project), VRDN, Series A, 4.55%
due 7/01/2013 (a) 8,300
9,000 (Philadelphia Airport Hotel), VRDN, AMT, 4.40% due 12/01/2017 (a) 9,000
20,880 Sayre, Pennsylvania, Health Care Facilities Authority Revenue Bonds (VHA
of Pennsylvania, Inc./Capital Assets Financing Program), VRDN, Series L,
4.20% due 12/01/2020 (a) 20,880
<PAGE>
South Carolina-- 2,000 Berkeley County, South Carolina, PCR, Refunding (Amoco Chemical Co.
0.8% Project), VRDN, 4.45% due 7/01/2012 (a) 2,000
24,400 Orangeburg County, South Carolina, Solid Waste Disposal Facilities Revenue
Bonds (South Carolina Electric & Gas), VRDN, AMT, 4.60% due 11/01/2024 (a) 24,400
South Carolina Jobs EDA, Revenue Bonds, VRDN (a):
7,200 (Greenfield Industries, Inc.), 4.50% due 3/01/2015 7,200
4,600 (Saint Francis Hospital Project), 4.60% due 7/01/2022 4,600
5,400 (Wellman, Inc. Project), 4.60% due 12/01/2010 5,400
14,100 (Wellman, Inc. Project), AMT, 4.60% due 12/01/2012 14,100
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Tennessee-- $ 9,400 Cleveland, Tennessee, IDB, Revenue Bonds (Newly Wed Foods Incorporated
0.7% Project), VRDN, AMT, 4.50% due 1/01/2012 (a) $ 9,400
8,100 Loudon, Tennessee, IDB, PCR, Refunding (A.E. Staley Manufacturing Co.
Project), VRDN, 4.40% due 9/01/2001 (a) 8,100
Memphis, Tennessee (Putters), UT, VRDN (a):
6,695 Series 3-A, 4.50% due 10/01/2013 6,695
3,680 Series 3-B, 4.50% due 10/01/2014 3,680
14,955 Morristown, Tennessee, IDB, PCR, Refunding (Akzo Chemicals, Inc. Project),
VRDN, 4.40% due 8/01/2001 (a) 14,955
12,000 Volunteer State Student Funding Corporation, Tennessee, Student Loan
Revenue Bonds, VRDN, AMT, Series A-1, 4.50% due 12/01/2017 (a) 12,000
<PAGE>
Texas--13.9% Brazos River Authority, Texas, PCR (Texas Utilities Electric Co.),
VRDN, AMT (a):
5,000 Refunding, Series B, 4.60% due 6/01/2030 5,000
8,600 Refunding, Series C, 4.60% due 6/01/2030 8,600
8,000 Series A, 4.60% due 4/01/2030 8,000
24,700 Brazos, Texas, Higher Education Authority Incorporated, Student Loan
Revenue Bonds, VRDN, AMT, Series B-1, 4.45% due 6/01/2023 (a) 24,700
4,000 Corpus Christi, Texas, IDR (Dedietrich USA Incorporated Project), VRDN,
AMT, 4.55% due 11/01/2008 (a) 4,000
10,000 Dallas-Fort Worth, Texas, Regional Airport Revenue Bonds, 3.80% due
12/01/1995 10,000
8,910 Galveston County, Texas, Health Facilities Development Corporation
Revenue Bonds (Devereux Foundation Project), VRDN, 4.55% due 1/01/2016 (a) 8,910
13,400 Grapevine, Texas, IDR, Airport Revenue Refunding Bonds (Southern Air
Transportation Project), VRDN, 4.40% due 3/01/2010 (a) 13,400
5,000 Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds (Citgo
Petroleum Corp. Project), VRDN, 4.65% due 5/01/2025 (a) 5,000
Gulf Coast Waste Disposal Authority, Texas, PCR (Amoco Oil Co. Project),
VRDN, AMT (a):
22,500 4.60% due 5/01/2023 22,500
10,900 4.60% due 6/01/2024 10,900
Gulf Coast Waste Disposal Authority, Texas, Solid Waste Disposal Revenue
Bonds (Amoco Oil Co. Project), AMT:
2,100 4.30% due 10/01/1995 2,100
14,300 Refunding, VRDN, 4.60% due 8/01/2023 (a) 14,300
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds, VRDN (a):
251,500 (Methodist Hospital), 4.65% due 12/01/2025 251,500
23,900 (Saint Luke's Episcopal Hospital), Series B, 4.65% due 2/15/2016 23,900
23,800 (Saint Luke's Episcopal Hospital), Series C, 4.65% due 2/15/2016 23,800
8,700 (Saint Luke's Episcopal Hospital), Series D, 4.65% due 2/15/2016 8,700
7,100 Harris County, Texas, Industrial Development Corporation, PCR (Exxon
Project), VRDN, Series 1984-A, 4.50% due 3/01/2024 (a) 7,100
80,000 Harris County, Texas, TAN, GO, 4.25% due 2/28/1996 80,229
Harris County, Texas, Toll Road Revenue Bonds, VRDN (a):
25,000 Sublien H, 4.10% due 8/01/2020 25,000
15,000 UT, Sublien D, 4.30% due 8/01/2015 15,000
20,000 Hockley County, Texas, Industrial Development Corporation, PCR (Amoco
Oil Co. Project), 3.65% due 3/01/1996 19,985
7,000 Houston, Texas, Public Improvement Bonds, VRDN, Series A, 4.20%
due 4/01/2013 (a) 7,000
15,000 Lower Colorado River Authority, Texas, CP, Revenue Bonds,
Series C, 3.45% due 10/10/1995 15,000
22,200 Lubbock, Texas, Health Facilities Development Corporation Revenue Bonds
(Saint Joseph Health System), VRDN, Series A, 4.50% due 7/01/2013 (a) 22,200
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Texas $ 13,700 North Texas Higher Education Authority Incorporated, Student Loan
(concluded) Revenue Bonds, AMT, Series F, 4.50% due 4/01/2020 (e) $ 13,700
North Texas Higher Education Authority Incorporated, Student Loan
Revenue Refunding Bonds, VRDN (a):
3,000 4.50% due 3/01/1999 3,000
27,900 4.50% due 3/01/2005 27,900
29,000 Series A, 4.50% due 4/01/2005 29,000
5,000 Series A, 4.50% due 4/01/2020 5,000
29,000 Panhandle Plains, Texas, Higher Education Authority Incorporated,
Student Loan Revenue Bonds, AMT, Series A, 4.45% due 6/01/1996 29,000
8,000 San Antonio, Texas, Electric and Gas Revenue Bonds, CP, Series A, 3.70%
due 10/10/1995 8,000
17,600 San Antonio, Texas, Higher Education Authority Revenue Refunding Bonds
(Trinity University Project), VRDN, 4.45% due 4/01/2004 (a) 17,600
6,900 Southwest Texas, Higher Education Authority Incorporated, Revenue Refunding
Bonds (Southern Methodist University), VRDN, 4.45% due 7/01/2015 (a) 6,900
Texas A&M University, University System Revenue Bonds (Financing
System), CP, Series B:
8,800 3.75% due 10/06/1995 8,800
20,000 3.80% due 10/12/1995 20,000
28,400 Texas State, Multi-Modal Water Development Board, VRDN, Series A, 4.70%
due 3/01/2015 (a) 28,400
35,000 Texas State, Public Financing Authority Revenue Bonds, CP, Series A,
3.85% due 12/07/1995 35,000
114,650 Texas State, TRAN, Series A, 4.75% due 8/30/1996 115,509
27,920 Travis County, Texas, Health Facility Development Corporation Revenue Bonds
(Daughters of Charity--Seton Medical Center), 4.45% due 11/01/2013 (a) 27,920
Waco, Texas, Health Facilities Development Corporation, Health
Facilities Revenue Bonds (Daughters of Charity--Providence Hospital):
18,485 4.45% due 11/01/2013 18,485
12,300 Series 88A, 4.45% due 11/01/2018 12,300
8,100 West Side Calhoun County, Texas, Development Corporation, PCR (Sohio
Chemical Company Project), VRDN, 4.65% due 12/01/2015 (a) 8,100
Utah--1.6% 47,500 Emery County, Utah, PCR, Refunding (Pacific Corporation Projects), VRDN,
4.45% due 11/01/2024 (a) 47,500
11,000 Intermountain Power Agency, Utah, Power Supply Revenue Bonds, CP,
Series E, 3.80% due 10/05/1995 11,000
Salt Lake City, Utah, PCR, Refunding (Service Station Holdings Project),
VRDN (a):
6,400 4.50% due 2/01/2008 6,400
15,100 Series B, 4.65% due 8/01/2007 15,100
Utah State Board of Regents, Student Loan Revenue Bonds, AMT (e):
33,500 Series L, 4.50% due 11/01/2025 33,500
6,000 VRDN, Series C, 4.50% due 11/01/2013 (a) 6,000
<PAGE>
Vermont-- 1,100 Vermont Higher Educational and Health Buildings, Financing Agency Revenue
0.8% Bonds (VHA-New England), VRDN, Series G, 4.20% due 12/01/2025 (a) (e) 1,100
Vermont State Student Assistance Corporation, Student Loan Revenue Bonds,
VRDN (a):
25,000 3.75% due 12/12/1995 25,000
32,075 3.90% due 1/01/2004 32,075
Virginia-- 8,500 Eagle Tax-Exempt Trust, Virginia, VRDN, Series 1995, Class 7091, 4.44%
3.4% due 1/15/2013 (a) 8,500
5,700 Loudoun County, Virginia, IDA, Residential Care Facility Revenue Bonds
(Falcons Landing Project), VRDN, Series B, 4.55% due 11/01/2024 (a) 5,700
71,650 Peninsula Ports Authority, Virginia, Revenue Refunding Bonds
(Port Facility--Shell Oil Company Project), UPDATES, Series A, 4.45%
due 12/01/2005 (a) 71,650
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1995 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Virginia Rockingham County, Virginia, IDA, Revenue Bonds:
(concluded) $ 16,000 (Merck & Co. Project), Series A, 4.65% due 10/01/2020 $ 16,000
1,000 VRDN, 4.90% due 10/01/2022 (a) 1,000
Virginia State Housing Development Authority, Commonwealth Mortgage
Revenue Bonds, Series D, Sub-Series D:
37,650 Stem I, 3.55% due 11/16/1995 37,650
55,000 Stem II, 3.60% due 1/04/1996 55,000
44,000 Stem III, 3.60% due 2/15/1996 44,000
20,800 Stem IV, 3.65% due 3/21/1996 20,800
Washington-- 10,200 Snohomish County, Washington, Public Utility District No. 001, Electric
1.4% Revenue Bonds (Generation System), VRDN, 4.35% due 1/01/2025 (a) (c) 10,200
17,200 Washington State, GO, 3.75% due 10/01/1995 17,200
9,400 Washington State Housing Finance Commonwealth, S/F Project Bonds, AMT,
Series 1A, 4.10% due 6/01/1996 (f) 9,400
Washington State Public Power Supply System, Revenue Refunding Bonds
(Nuclear Project No. 3), VRDN (a):
23,970 Series 3A-1, 4.40% due 7/01/2018 23,970
9,100 Series 3A-2, 4.45% due 7/01/2018 9,100
Washington Student Loan Finance Association Revenue Bonds (Guaranteed
Student Loan Program), VRDN (a):
11,400 AMT, Series A, 4.45% due 12/01/2002 11,400
6,000 AMT, Series B, 4.45% due 12/01/2002 6,000
10,680 AMT, Series B, 4.05% due 1/01/2004 10,680
10,400 Second Series, 4% due 1/01/2001 10,400
West Virginia-- 11,220 Hancock County, West Virginia, County Commission, IDR, Refunding
0.2% (The Boc Group Inc. Project), VRDN, 4.40% due 8/01/2005 (a) 11,220
<PAGE>
Wisconsin-- Eagle Tax-Exempt Trust, Wisconsin, VRDN (a):
1.1% 6,600 Series 94, Class 4901, 4.49% due 9/01/2015 6,600
24,300 Series 94, Class 4905, 4.49% due 10/01/2005 24,300
18,450 Milwaukee, Wisconsin, RAN, Series A, 5.50% due 2/22/1996 18,502
19,000 Pleasant Prairie, Wisconsin, PCR, Refunding (Wisconsin Electric &
Power Co.), VRDN, Series C, 4.40% due 9/01/2030 (a) 19,000
16,000 Sheboygan, Wisconsin, PCR, Refunding (Wisconsin Power and Light Company
Project), VRDN, Series A, 4.55% due 9/01/2015 (a) 16,000
2,250 Wisconsin State Health Facilities Authority Revenue Bonds (Saint Mary's
Hospital of Milwaukee--Daughters of Charity), VRDN, 4.45%
due 11/06/2016 (a) 2,250
Wyoming-- 17,500 Sweetwater County, Wyoming, PCR, Refunding (Pacific Corporation Project),
1.8% VRDN, 4.35% due 7/01/2015 (a) 17,500
Uinta County, Wyoming, PCR:
41,855 (Amoco Oil Company Project), Series A, 4.27% due 12/01/1995 41,826
66,850 Refunding (Chevron USA Inc. Project), VRDN, 4.40% due 8/15/2020 (a) 66,850
10,300 Refunding (Chevron USA Inc. Project), VRDN, 4.40% due 12/01/2022 (a) 10,300
Total Investments (Cost--$7,672,510*)--101.5% 7,672,510
Liabilities in Excess of Other Assets--(1.5)% (114,282)
----------
Net Assets--100.0% $7,558,228
==========
<FN>
(a)The interest rate is subject to change periodically based
on certain indexes. The interest rate shown is the rate in
effect at September 30, 1995.
(b)Prerefunded; to be called.
(c)MBIA Insured.
(d)FHA Insured.
(e)AMBAC Insured.
(f)FGIC Insured.
(g)SNMA Collateralized.
*Cost for Federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1995
<S> <C> <C>
Assets:
Investments, at value (identified cost--$7,672,510,123) (Note 1a) $ 7,672,510,123
Cash 718,278
Interest receivable 42,960,041
Prepaid registration fees and other assets (Note 1d) 176,996
---------------
Total assets 7,716,365,438
---------------
Liabilities:
Payables:
Securities purchased $ 151,726,102
Investment adviser (Note 2) 2,386,831
Distributor (Note 2) 1,914,395
Beneficial interest redeemed 1,360,560 157,387,888
---------------
Accrued expenses and other liabilities 749,962
---------------
Total liabilities 158,137,850
---------------
Net Assets $ 7,558,227,588
===============
Net Assets Consist of:
Shares of beneficial interest, $0.10 par value, unlimited number of shares
authorized $ 756,363,196
Paid-in capital in excess of par 6,807,268,759
Undistributed investment income--net 180,946
Accumulated realized capital losses--net (Note 4) (5,585,313)
---------------
Net Assets--Equivalent to $1.00 per share based on 7,563,631,955 shares of
beneficial interest outstanding $ 7,558,227,588
===============
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 149,323,665
Expenses:
Investment advisory fees (Note 2) $ 14,629,564
Distribution fees (Note 2) 4,722,018
Transfer agent fees (Note 2) 893,075
Accounting services (Note 2) 246,837
Registration fees (Note 1d) 191,851
Custodian fees 99,865
Printing and shareholder reports 80,041
Professional fees 48,567
Trustees' fees and expenses 24,103
Pricing fees 23,487
Other 157,459
---------------
Total expenses 21,116,867
---------------
Investment income--net 128,206,798
Realized Gain on Investments--Net (Note 1c) 75,247
---------------
Net Increase in Net Assets Resulting from Operations $ 128,282,045
===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: Sept. 30, 1995 March 31, 1995
<S> <C> <C>
Operations:
Investment income--net $ 128,206,798 $ 204,460,186
Realized gain (loss) on investments--net 75,247 (1,362,814)
--------------- ---------------
Net increase in net assets resulting from operations 128,282,045 203,097,372
--------------- ---------------
Dividends to Shareholders (Note 1e):
Investment income-- net (128,083,641) (204,366,652)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (128,083,641) (204,366,652)
--------------- ---------------
<PAGE>
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 11,667,805,084 23,571,897,187
Net asset value of shares issued to shareholders in reinvestment of
dividends (Note 1e) 128,085,127 204,370,799
--------------- ---------------
11,795,890,211 23,776,267,986
Cost of shares redeemed (11,629,824,686) (24,294,994,658)
--------------- ---------------
Net increase (decrease) in net assets derived from beneficial interest
transactions 166,065,525 (518,726,672)
--------------- ---------------
Net Assets:
Total increase (decrease) in net assets 166,263,929 (519,995,952)
Beginning of period 7,391,963,659 7,911,959,611
--------------- ---------------
End of period* $ 7,558,227,588 $ 7,391,963,659
=============== ===============
<FN>
*Undistributed investment income-- net $ 180,946 $ 57,789
=============== ===============
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios
have been derived from information provided
in the financial statements. For the Six
Months Ended For the Year Ended March 31,
Increase (Decrease) in Net Asset Value: Sept. 30, 1995 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Investment income--net .02 .03 .02 .02 .04
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.02) (.03) (.02) (.02) (.04)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment Return 3.42%* 2.76% 1.96% 2.36% 3.76%
========== ========== ========== ========== ==========
Ratios to Average Net Assets:
Expenses, excluding distribution fees .43%* .43% .42% .42% .42%
========== ========== ========== ========== ==========
Expenses .56%* .55% .55% .54% .54%
========== ========== ========== ========== ==========
Investment income on investments--net 3.39%* 2.70% 1.94% 2.33% 3.70%
========== ========== ========== ========== ==========
<PAGE>
Supplemental Data:
Net assets, end of period (in thousands) $7,558,228 $7,391,964 $7,911,960 $7,527,054 $7,874,437
========== ========== ========== ========== ==========
<FN>
*Annualized.
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 no-load, diversified, open-end management
investment company. These unaudited financial statements reflect all
adjustments which are, in the opinion of management, necessary to a
fair statement of the results for the interim period presented. All
such adjustments are of a normal recurring nature. The following is
a summary of significant accounting policies followed by the Fund.
(a) Valuation of investments--Investments are valued at amortized
cost, which approximates market value. For the purpose of valuation,
the maturity of a variable rate demand instrument is deemed to be
the 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
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income to
its shareholders. Therefore, no Federal income tax provision is
required.
(c) Security transactions and investment income--Security
transactions 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. Realized
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 and distributions 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 discounts earned other than original price
discounts. Net realized capital gains, if any, are normally
distributed annually after deducting prior years' loss carryforward.
The Fund may distribute capital gains more frequently than annually
in order to maintain the Fund's net asset value at $1.00 per share.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
AssetManagement, L.P. ("FAM" or "Adviser"). The general partner of
FAM is Princeton Services, Inc. ("PSI"), an indirect wholly-owned
subsidiary of Merrill Lynch & Co., Inc. ("ML & Co."), which is the
limited partner.
FAM is responsible for the management of the Fund's portfolio and
provides the necessary personnel, facilities, equipment and certain
other services necessary to the operations of the Fund. For such
services, the Fund pays a monthly fee based upon the average daily
value of the Fund's net assets at the following annual rates: 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
the Adviser 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 ofaverage 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.
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.
<PAGE>
Merrill Lynch Financial Data Services, Inc. ("MLFDS"), 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, PSI, MLPF&S, MLFDS, 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, 1995, the Fund had a net capital loss carryforward of
approximately $5,227,000, of which $2,969,000 expires in 1997,
$1,358,000 expires in 1998, $210,000 expires in 1999, and $690,000
expires in 2003. This amount will be available to offset like
amounts of any future taxable gains.
