CMA
CMA TAX EXEMPT FUND
Semi-Annual Report
September 30, 1996
MERRILL LYNCH BULL LOGO
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
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. Statements and
other information herein are as dated and are subject to change.
<PAGE>
CMA Tax-Exempt Fund
Box 9011
Princeton, NJ 08543-9011
Printed on post-consumer recycled paper
TO OUR SHAREHOLDERS:
For the six-month period ended September 30, 1996, CMA Tax-Exempt
Fund paid shareholders a net annnualized yield of 2.95%*. As of
September 30, 1996, the Fund's 7-day yield was 3.22%.
The Environment
Although the US stock and bond markets rallied late in the six-month
period ended September 30, 1996, much of the period was marked by
volatility in the capital markets. The US economy demonstrated
surprising resilience during the first half of the year. As a
result, when economic data releases appeared to indicate that the US
economy was expanding at a stronger-than-expected (and potentially
inflationary) rate, investors focused on the increasing possibility
of monetary policy tightening by the Federal Reserve Board. During
these periods, stock prices declined and long-term interest rates
moved higher. However, with inflationary pressures still under
control, the US central bank did not tighten monetary policy at its
September 24 meeting. This development, coupled with several
economic data releases that showed growth was at or below
expectations, helped to assuage investors' concerns about an
overheating economy. Stock and bond prices improved, with stock
market averages reaching historic high levels.
<PAGE>
The shifts in perceptions were exemplified by investors' reactions
to the release of recent employment reports. Inflationary concerns
were heightened in early July with the release of a stronger-than-
expected employment report for June. However, more subdued job
growth and decelerating hourly wage gains were subsequently reported
for the month of July. Although the employment report for August
showed that unemployment had dropped to its lowest level since 1989,
these results were generally in line with expectations, and were
received favorably by investors. The greatest boost in investor
confidence occurred in early October with the release of September's
employment report, which showed a slight increase in unemployment.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
Investors will continue to monitor economic data releases to
determine the probable direction of the US economy. The outcome of
the upcoming November election will also increasingly influence
investor psychology in the weeks ahead.
Investment Outlook and Strategy
Despite a volatile market environment during the six-month period
ended September 30, 1996, short-term interest rates closed the
period unchanged to modestly higher than their levels on April 1,
1996. The three-month US Treasury bill traded as high as 5.34% and
as low as 4.96%, only to end the six-month period at 5.13%,
unchanged from its April 1, 1996 level. However, the one-year US
Treasury bill, which experienced similar volatility, ended the
period approximately 25 basis points (0.25%) higher at 5.65%. This
was reflected by the steepening of the yield curve which occurred as
a result of the inflationary premium that investors began to require
in order to purchase securities with longer maturities. Additionally,
despite constant expectations by investors of a Federal Reserve Board
tightening of monetary policy, the Federal Reserve Board actually
left policy unchanged during the six-month period ended September
30, 1996. Although economic data reported early in the period,
especially unemployment data, seemed to indicate stronger growth
and possible future increases in inflation, later in the period
data seemed to indicate the contrary. The ambiguity of the data
allowed the Federal Reserve Board to leave monetary policy unchanged
rather than face the political risks of higher interest rates
prior to a Presidential election.
Short-term tax-exempt interest rates ended the six-month period
ended September 30, 1996 higher than their April 1, 1996 levels in
response mainly to supply and demand pressures. The market had to
deal first with the outflows experienced by the tax-exempt money
fund industry in April and then the problem of absorbing the
heaviest new-issue calendar of the year. Although interest rates on
variable rate demand notes and tax-exempt commercial paper remained
in much the same range as they have for the last several periods,
yields on tax-exempt notes in the six-month--twelve-month range rose
over the course of the six-month period ended September 30, 1996.
<PAGE>
Despite large inflows of money at the beginning of July from
dividend reinvestment, bond calls and defeasance, assets of the tax-
exempt money fund industry actually ended the period nearly $2
billion lower than the onset of the period when assets totaled
$135.7 billion. Additionally, new-issue supply in the six-month
period ended September 30, 1996 rose 38% from the same period in
1995, to $35.5 billion. The majority of this issuance came to market
in the latter part of the period. These factors contributed to the
30 basis point--40 basis point rise in interest rates of short-term
municipal notes over the course of the six-month period.
We maintained a relatively defensive average portfolio maturity in
CMA Tax-Exempt Fund for most of the period for several reasons. One
was the anticipated outflow of assets from tax-related redemptions
in late April forcing yields higher. Another was the anticipation
that the tremendous volume of new-issue supply in July and August
would also cause interest rates to rise. Finally, uncertainty
surrounding the Federal Reserve Board's monetary policy and the
possibility of a change to a tighter policy caused us to remain
cautious on the market. However, by late August we extended the
Fund's average portfolio maturity to the 60-day range, mainly with
the purchase of Texas Tax and Revenue Anticipation Notes which came
to market with a $1.2 billion issue in late August. At that time we
became more constructive on the market as most new-issue supply had
been absorbed and more recent economic data led us to believe that
Federal Reserve Board policy would remain unchanged, at least until
after the upcoming November election. Additionally, short-term tax-
exempt interest rates rose sufficiently to make them an attractive
investment as compared to their taxable alternatives. This strategy
of extending the average portfolio maturity enhanced the Fund's
performance, as interest rates began to fall by the end of
September, allowing us to lock in at what appeared to be the peak in
interest rates for the period. We anticipate maintaining this
strategy throughout the six-month period ended March 31, 1997 as we
enter a period of modest new issuance and we await the huge increase
in assets which typically occurs throughout the industry each
January.
In Conclusion
We thank you for your continued support of 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
<PAGE>
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Peter J. Hayes)
Peter J. Hayes
Vice President and Portfolio Manager
November 4, 1996
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
M/F Multi-Family
PCR Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
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, 1996 (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Alabama-- $ 28,000 Birmingham, Alabama, Medical Clinic Board Revenue Bonds (U.A.H.S.F.),
2.4% VRDN, 4.05% due 12/01/2026 (a) $ 28,000
Columbia, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project),
VRDN (a):
20,900 Series A, 3.95% due 5/01/2022 20,900
8,200 Series C, 4% due 10/01/2022 8,200
9,000 Series E, 3.90% due 10/01/2022 9,000
9,800 Decatur, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Amoco
Chemical Co. Project), VRDN, AMT, 4.10% due 5/01/2025 (a) 9,800
20,000 Jefferson County, Alabama, Sewer Revenue Warrants, VRDN, Series A, 3.90%
due 9/01/2025 (a) 20,000
7,600 McIntosh, Alabama, IDB, PCR (Ciba-Geigy Corporation Project), VRDN,
Series A, 3.90% due 12/01/2003 (a) 7,600
37,900 McIntosh, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Ciba-Geigy
Corporation Project), VRDN, AMT, 3.85% due 7/01/2004 (a) 37,900
Mobile, Alabama, IDB, PCR:
5,990 (International Paper Co.), 3.65% due 10/15/1996 5,990
11,600 Refunding (Alabama Power Co. Project), VRDN, 3.95% due 6/01/2015 (a) 11,600
10,105 Montgomery, Alabama, Special Care Facilities Financing Authority, Health
Care Facilities Revenue Bonds (Saint Margaret's Hospital--Daughters of
Charity), VRDN, 3.85% due 11/01/2013 (a) 10,105
10,000 Parrish, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project),
VRDN, 3.95% due 6/01/2015 (a) 10,000
Alaska--1.6% 10,400 Alaska Industrial Development and Export Authority Revenue Bonds, VRDN,
AMT, Series B, 3.90% due 4/01/2023 (a) 10,400
Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Exxon Pipeline
Co. Project), VRDN (a):
20,000 Series A, 3.90% due 12/01/2033 20,000
60,000 Series B, 3.90% due 12/01/2033 60,000
29,000 Series C, 3.90% due 12/01/2033 29,000
Arizona-- 26,300 Apache County, Arizona, IDA, IDR (Tucson Electric Power Co.--Springerville
2.2% Project), VRDN, Series B, 3.85% due 12/15/2018 (a) 26,300
10,200 Arizona Educational Loan Marketing Revenue Bonds, VRDN, AMT, Series A,
4% due 3/01/2015 (a) (c) 10,200
4,300 Maricopa County, Arizona, IDA, Hospital Facilities Revenue Bonds (Samaritan
Health Service Hospital), VRDN, Series B-2, 3.90% due 12/01/2008 (a) (c) 4,300
21,500 Maricopa County, Arizona, PCR (El Paso Electric Co. Project), VRDN,
Series A, 4.05% due 7/01/2014 (a) 21,500
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Arizona Maricopa County, Arizona, PCR, Refunding (Arizona Public Service Co.),
(concluded) VRDN (a):
$ 47,600 Series A, 3.90% due 5/01/2029 $ 47,600
19,000 Series C, 3.95% due 5/01/2029 19,000
19,700 Series D, 4% due 5/01/2029 19,700
4,200 Series E, 3.95% due 5/01/2029 4,200
14,200 Series F, 3.95% due 5/01/2029 14,200
2,300 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont Mining Corp.),
VRDN, 4.05% due 12/01/2009 (a) 2,300
Arkansas-- 19,000 Little River County, Arkansas, Solid Waste Disposal Revenue Bonds
0.3% (Nekoosa Papers Incorporated Project), VRDN, AMT, 3.95% due 2/01/2025 (a) 19,000
California 49,900 California Higher Education Loan Authority, Inc., Student Loan Revenue
5.4% Bonds, AMT, Series C, 4% due 6/01/1997 (k) 49,895
California Higher Education Loan Authority, Inc., Student Loan Revenue
Refunding Bonds:
10,000 AMT, Series A, 4% due 6/01/1997 10,000
10,000 Senior Lien, Series A-1, 3.95% due 7/01/1997 (k) 10,000
10,000 Senior Lien, Series A-2, 3.70% due 5/01/1997 (k) 10,000
20,425 Series A, 3.70% due 5/01/1997 20,425
33,000 VRDN, AMT, Series E-1, 3.90% due 12/01/2022 (a) (k) 33,000
50,000 California Public Capital Improvements Financing Authority Revenue Bonds
(Pooled Loan Project), Series D, 3.80% due 12/15/1996 50,000
45,500 California State, RAN, Series B, 3.504% due 6/30/1997 45,500
17,600 Eastern Municipal Water District, California, Water and Sewer Revenue
Refunding Bonds, VRDN, COP, Series B, 3.65% due 7/01/2020 (a) (f) 17,600
3,500 Fremont, California, Unified School District (Alameda County), TRAN, UT,
4.625% due 7/01/1997 3,518
55,000 Los Angeles County, California, Local Educational Agencies, TRAN,
Series A, 4.75% due 6/30/1997 (g) 55,336
40,000 Los Angeles County, California, Metropolitan Transportation Authority
Revenue Bonds, VRDN, 3.60% due 7/01/2025 (a) (g) 40,000
8,500 Oakland, California, TRAN, 4.75% due 6/30/1997 8,552
50,000 San Bernardino County, California, TRAN, 4.50% due 6/30/1997 50,225
7,500 Southern California Public Power Authority, Revenue Refunding Bonds
(Southern Transmission Project), VRDN, 3.70% due 7/01/2019 (a) (e) 7,500
<PAGE>
Colorado-- 4,980 Arapahoe County, Colorado, School District Number 005, Refunding
2.8% (Cherry Creek), UT, Series A, 4.50% due 12/15/1996 4,991
Colorado Health Facilities Authority Revenue Bonds, VRDN (a):
6,700 (North Colorado Medical Center), 3.80% due 5/15/2020 (c) 6,700
10,700 (Sisters of Charity Health Services ), 3.80% due 5/15/2025 10,700
12,000 (Sisters of Charity Health Services), Series C, 3.80% due 5/15/2022 12,000
122,500 Colorado State, TRAN, UT, Series A, 4.50% due 6/27/1997 123,130
10,500 Denver, Colorado, City and County Airport Revenue Bonds, VRDN, AMT,
Series F, 3.95% due 11/15/2025 (a) 10,500
5,000 Denver, Colorado, City and County Water, GO, Refunding, UT, 5%
due 10/01/1996 5,000
3,755 Moffat County, Colorado, PCR (Pacificorp Projects), VRDN, 3.90%
due 5/01/2013 (a) (e) 3,755
14,755 Palomino Park, Colorado, Assessment Lien Revenue Bonds (Public
Improvements Corporation), VRDN, 3.70% due 12/01/2035 (a) 14,755
Pitkin County, Colorado, IDR, Refunding (Aspen Skiing Co. Project), VRDN (a):
6,500 AMT, Series B, 4.20% due 4/01/2014 6,500
2,700 Series A, 4.10% due 4/01/2016 2,700
8,000 Westminster, Colorado, IDR, Refunding (Ball Corp. Project), VRDN, 3.90%
due 6/01/2005 (a) 8,000
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Connecticut-- Connecticut State, HFA, Housing Mortgage Finance Program:
0.9% $ 4,600 AMT, Series A, Sub-Series A-4, 3.65% due 4/10/1997 $ 4,600
5,000 Series A, Sub-Series A-3, 3.60% due 4/10/1997 5,000
18,200 VRDN, Series G, 3.75% due 5/15/2018 (a) (e) 18,200
22,000 Connecticut State Special Assessment, Unemployment Compensation,
Advanced Fund Revenue Bonds (Connecticut Unemployment), Series C, 3.90%
due 7/01/1997 (f) 22,000
13,200 Eagle Tax Exempt Trust, Connecticut, VRDN, 3.95% due 8/15/2012 (a) 13,200
6,500 Mashantucket, Connecticut, Western Pequot Tribe, CP, 3.65% due 10/09/1996 6,500
Delaware-- Delaware State, EDA, Revenue Bonds (Delmarva Power & Light Co. Project),
0.1% VRDN, AMT (a):
4,400 4.15% due 10/01/2017 4,400
2,100 Series A, 4.15% due 10/01/2017 2,100
District of 10,300 District of Columbia, General Fund Recovery Bonds, VRDN, UT, Series B-3,
Columbia-- 4.05% due 6/01/2003 (a) 10,300
0.9% 17,600 District of Columbia, Hospital Revenue Bonds (Providence Hospital--
Daughters of Charity), VRDN, Series 89-A, 3.85% due 12/01/2019 (a) 17,600
11,800 District of Columbia, Revenue Bonds (George Washington University),
VRDN, Series A, 4% due 3/01/2006 (a) 11,800
26,700 Eagle Tax Exempt Trust, District of Columbia, VRDN, Series 1994-A, 4%
due 6/01/2005 (a) 26,700
<PAGE>
Florida-- 3,400 Broward County, Florida, HFA, M/F Housing Revenue Bonds (Margate
2.5% Investments Projects), VRDN, 3.85% due 11/01/2005 (a) 3,400
34,710 Dade County, Florida, Aviation Revenue Refunding Bonds, VRDN, Series V,
3.80% due 10/01/2007 (a) 34,710
3,900 Dade County, Florida, IDA, Exempt Facilities Revenue Refunding Bonds
(Florida Power and Light Co.), VRDN, 3.95% due 6/01/2021 (a) 3,900
5,700 Dade County, Florida, Special Obligation, Capital Asset Acquisition
Bonds, VRDN, 4.25% due 10/01/2010 (a) 5,700
25,000 Florida State Turnpike Authority, Turnpike Revenue Bonds, Series A,
3.60% due 4/01/1997 25,000
6,300 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric
Company Project), VRDN, 3.90% due 9/01/2025 (a) 6,300
5,500 Martin County, Florida, PCR, Refunding (Florida Power & Light Co.
Project), VRDN, 3.90% due 9/01/2024 (a) 5,500
52,700 Palm Beach County, Florida, School District, TAN, 4.50% due 9/26/1997 53,023
4,900 Palm Beach County, Florida, Water and Sewer Revenue Bonds, VRDN, 4%
due 10/01/2011 (a) 4,900
3,200 Pinellas County, Florida, Health Facilities Authority, Revenue Refunding
Bonds (Pooled Hospital Loan Program), DATES, 4.05% due 12/01/2015 (a) 3,200
Saint Lucie County, Florida, PCR, Refunding (Florida Power & Light Co.
Project), VRDN (a):
25,390 3.90% due 1/01/2026 25,390
5,400 4% due 3/01/2027 5,400
4,900 Saint Lucie County, Florida, Solid Waste Disposal Revenue Bonds (Florida
Power & Light Co. Project), VRDN, AMT, 4.10% due 1/01/2027 (a) 4,900
6,860 Volusia County, Florida, Health Facilities Authority Revenue Bonds
(Pooled Hospital Loan Program), ACES, 4% due 11/01/2015 (a) (f) 6,860
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Georgia-- Burke County, Georgia, Development Authority, PCR (Georgia Power
3.0% Company--Plant Vogtle Project), VRDN (a):
$ 27,900 2nd Series, 3.95% due 4/01/2025 $ 27,900
8,400 3rd Series, 3.95% due 7/01/2024 8,400
28,900 4th Series, 4% due 7/01/2024 28,900
26,700 Refunding, 3rd Series, 3.95% due 9/01/2025 26,700
37,100 Burke County, Georgia, Development Authority, PCR (Oglethorpe Power
Corporation), VRDN, Series A, 3.80% due 1/01/2016 (a) (f) 37,100
8,939 Georgia Municipal Association, Pooled Bonds, VRDN, 3.80%
due 12/15/2020 (a) (c) 8,938
4,000 Georgia Municipal Electric Authority, Power Revenue Bonds, Series L,
7.75% due 1/01/1997 (b) 4,123
10,015 Georgia State Residential Finance Authority, Home Ownership Mortgage
<PAGE> Bonds, AMT, Series A, 3.85% due 3/01/1997 (d) 10,015
4,500 Georgia State Residential Finance Authority, S/F Insured Mortgage
Revenue Bonds, AMT, Series A, 3.85% due 3/01/1997 (d) 4,500
9,145 Georgia State, Tender Options, VRDN, Series 79-A, 3.25% due 12/12/1996 (a) 9,129
Monroe County, Georgia, Development Authority, PCR (Georgia Power Co.),
VRDN (a):
11,600 1st Series, 3.95% due 7/01/2025 11,600
24,900 2nd Series, 4% due 7/01/2025 24,900
Municipal Electric Authority, Georgia, CP, Series 1-A:
20,575 3.65% due 10/07/1996 20,575
5,000 3.70% due 10/09/1996 5,000
Idaho--0.5% 7,250 Custer County, Idaho, PCR (Amoco Project--Standard Oil), 3.40%
due 10/01/1996 7,250
33,000 Idaho State, TAN, GO, 4.50% due 6/30/1997 33,142
Illinois-- 7,000 Chicago, Illinois, IDR (Enterprise Center VIII Project), VRDN, AMT, 4%
11.8% due 6/01/2022 (a) 7,000
Chicago, Illinois, O'Hare International Airport Revenue Bonds (General
Airport Second Lien), VRDN (a):
6,830 Series B, 3.90% due 1/01/2015 6,830
20,700 Series C, 4% due 1/01/2018 20,700
14,800 Chicago, Illinois, O'Hare International Airport, Special Facilities
Revenue Bonds(Compagnie Nationale--Air France), VRDN, AMT, 3.90%
due 5/01/2018 (a) 14,800
Chicago, Illinois, Tender Notes:
67,200 3.10% due 2/04/1997 67,134
35,000 CP, Series C, 3.75% due 10/31/1996 35,000
10,000 Series A, 3.65% due 10/31/1996 10,000
19,400 Series B, 3.65% due 10/31/1996 19,400
23,600 VRDN, Series B, 3.80% due 1/01/2012 (a) 23,600
15,100 Cook County, Illinois, Tender Notes, VRDN, Series A, 3.90% due 3/01/2000 (a) 15,100
13,800 Eagle Tax Exempt Trust, Illinois, VRDN, Series 95, Class 7090, 4%
due 1/01/2024 (a) 13,800
Illinois Development Finance Authority, VRDN (a):
42,200 PCR, Refunding (Commonwealth Edison Company Project), Series B, 3.80%
due 10/15/2014 42,200
60,100 Revenue Bonds (Lyric Opera Chicago Project), 3.85% due 12/01/2028 60,100
8,860 Revenue Bonds (Residential Rental--River Oaks Project), AMT, 3.90%
due 12/15/2019 8,860
6,000 Revenue Refunding Bonds (Olin Corporation Project), Series A, 4%
due 6/01/2004 6,000
Illinois Educational Facilities Authority Revenue Bonds, VRDN (a):
17,000 (Art Institute of Chicago), 3.90% due 3/01/2027 17,000
5,200 (Chicago Historical Society), 3.85% due 12/01/2025 5,200
27,400 (Illinois Institute of Technology), Series A, 3.85% due 9/01/2025 27,400
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Illinois Illinois Health Facilities Authority Revenue Bonds (a):
(concluded) $ 6,900 (Central Dupage Healthcorp. Project), VRDN, 3.95% due 11/01/2020 $ 6,900
15,000 (Decatur Memorial Hospital Project), VRDN, Series A, 3.90% due
11/15/2024 (c) 15,000
38,600 (Evangelical Hospital Corporation), VRDN, Series A, 3.90% due 1/01/2010 38,600
29,550 (Franciscan Sisters Health Service), VRDN, 4% due 1/01/2018 29,550
15,100 (Highland Park Hospital), VRDN, Series B, 3.90% due 10/01/2012 (f) 15,100
8,600 (Hospital Sisters Services, Inc.), UPDATES, Series E, 3.90% due
12/01/2014 (c) 8,600
42,600 (Northwest Community Hospital), VRDN, 3.85% due 7/01/2025 42,600
76,700 (Northwestern Memorial Hospital), VRDN, 4.05% due 8/15/2025 76,700
7,000 (Pooled Financing Program), VRDN, Series F, 3.80% due 8/01/2015 7,000
74,500 (Resurrection Health Care System), VRDN, 4.10% due 5/01/2011 74,500
Illinois Health Facilities Authority Revenue Bonds (Evanston Hospital
Corporation Project):
10,000 CP, 3.35% due 12/27/1996 10,000
30,000 CP, 3.75% due 2/28/1997 30,000
30,000 CP, Series A, 3.40% due 10/15/1996 30,000
10,000 Series A, 3.75% due 10/31/1996 10,000
10,000 Series B, 3.75% due 10/31/1996 10,000
10,000 Series C, 3.75% due 10/31/1996 10,000
10,000 Series D, 3.75% due 10/31/1996 10,000
5,000 Series E, 3.75% due 10/31/1996 5,000
Illinois State, GO:
10,000 3.60% due 10/01/1996 (f) 10,000
18,815 VRDN, UT, 3.95% due 8/01/2019 (a) (c) 18,815
5,000 Illinois Student Assistance Commission, Student Loan Revenue Bonds,
VRDN, AMT, Series A, 3.95% due 3/01/2016 (a) 5,000
21,350 Regional Transportation Authority, Illinois, VRDN, 3.95%
due 6/01/2025 (a) (c) 21,350
11,100 Southwestern Illinois Development Authority, Solid Waste Disposal Revenue
Bonds (Shell Oil Co.--Wood River Project), VRDN, AMT, 4.10% due 8/01/2021 (a) 11,100
<PAGE>
Indiana-- 28,985 Evansville, Indiana, Hospital Authority Revenue Bonds (Saint Mary's
3.6% Medical Center--Daughters of Charity), VRDN, 3.85% due 11/01/2013 (a) 28,985
Fort Wayne, Indiana, Hospital Authority Revenue Bonds (Parkview Memorial
Hospital), VRDN (a):
1,645 Series B, 3.80% due 1/01/2016 1,645
2,700 Series B, 3.80% due 1/01/2020 2,700
3,505 Series C, 3.80% due 1/01/2016 3,505
5,670 Series D, 3.80% due 1/01/2016 5,670
65,000 Indiana Bond Bank, Reassessment Assistance Notes, GO, Series B, 4.50%
due 1/30/1997 65,129
Indiana Health Facilities Financing Authority, Hospital Revenue Bonds,
ACES (a):
5,400 (Daughters of Charity National Health System), Series A, 3.85%
due 11/01/2022 5,400
1,700 (Daughters of Charity National Health System), Series B, 3.85%
due 11/01/2022 1,700
7,900 (Methodist Hospital of Indiana, Inc.), Series B, 3.90% due 9/01/2022 7,900
34,200 (Methodist Hospital of Indiana, Inc.), Series C, 3.90% due 9/01/2022 34,200
Indiana Secondary Market Educational Loans Incorporated, Student Loan
Revenue Bonds, VRDN, AMT, Series B (a) (e):
26,900 3.90% due 12/01/2013 26,900
22,500 3.90% due 12/01/2014 22,500
46,240 Marion County, Indiana, Hospital Authority, Hospital Facility Revenue
Bonds (Saint Vincent's Hospital and Healthcare--Daughters of Charity),
VRDN, 3.85% due 11/01/2013 (a) 46,240
17,600 Rockport, Indiana, PCR, Refunding (AEP Generating Co. Project), VRDN,
Series A, 3.95% due 7/01/2025 (a) (e) 17,600
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Iowa-- $ 5,000 Chillicothe, Iowa, PCR, Refunding (Iowa-Illinois Gas & Electric
1.7% Project), VRDN, 3.90% due 1/01/2023 (a) $ 5,000
Iowa Finance Authority, Solid Waste Disposal Revenue Bonds (Cedar
River Paper Company Project), VRDN, Series A (a):
42,500 4.15% due 7/01/2023 42,500
42,000 AMT, 4.15% due 6/01/2024 42,000
20,500 AMT, 4.15% due 5/01/2025 20,500
3,700 Iowa Higher Education Loan Authority Revenue Bonds (Private College
Facilities), ACES, 3.85% due 12/01/2015 (a) (c) 3,700
14,500 Iowa Student Loan Corporation, Student Loan Revenue Bonds, VRDN, AMT,
Series B, 3.95% due 12/01/2013 (a) (e) 14,500
<PAGE>
Kansas-- 34,500 Butler County, Kansas, Solid Waste Disposal and Cogeneration Revenue Bonds
1.1% (Texaco Refining and Marketing Project), VRDN, AMT, Series B,
4.15% due 8/01/2024 (a) 34,500
9,100 Butler County, Kansas, Solid Waste Disposal Facilities Revenue Bonds
(Texaco Refining and Marketing Project), VRDN, AMT, Series A, 4.10%
due 8/01/2024 (a) 9,100
23,700 Kansas State, Department of Transportation, Highway Revenue Bonds, VRDN,
Series B, 3.80% due 9/01/2014 (a) 23,700
Wichita, Kansas, Hospital Revenue Bonds (CSJ Health Systems), VRDN (a):
1,000 4% due 10/01/2002 1,000
15,300 4% due 10/01/2008 15,300
Kentucky-- 5,100 Ashland, Kentucky, PCR (Merck & Co./Calgon Carbon Project), VRDN, 4.05%
0.5% 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, 4.10% due
11/01/2024 (a) 22,700
8,600 Kentucky Economic Development Finance Authority Revenue Bonds (Sisters
of Charity), VRDN, 3.95% due 11/01/2020 (a) 8,600
Louisiana-- 3,350 Bastrop, Louisiana, IDB, PCR (International Paper Co.), 3.65%
4.0% due 10/15/1996 3,350
31,500 Calcasieu Parish, Louisiana, IDB, Environmental Revenue Refunding Bonds
(Citgo Petroleum Corporation), VRDN, AMT, 4.15% due 3/01/2025 (a) 31,500
8,800 Eagle Tax Exempt Trust, Louisiana, VRDN, Series 94, 4% due 5/01/2008 (a) 8,800
20,700 East Baton Rouge Parish, Louisiana, PCR, Refunding (Exxon Project),
VRDN, 3.95% due 3/01/2022 (a) 20,700
5,200 Louisiana Public Facilities Authority, Hospital Revenue Bonds (Hospital
Equipment Financing and Refunding Program), VRDN, Series A, 4.25%
due 12/01/2005 (a) 5,200
17,000 Louisiana Public Facilities Authority Revenue Bonds (Kenner Hotel Ltd.),
VRDN, 4.05% due 12/01/2015 (a) 17,000
Louisiana State Offshore Terminal Authority, Deepwater Port Revenue
Refunding Bonds (Loop Inc.--First Stage) (a):
35,050 ACES, 3.90% due 9/01/2006 35,050
100 VRDN, Series A, 3.90% due 9/01/2008 100
14,100 Plaquemines Parish, Louisiana, Environmental Revenue Bonds
(BP Exploration & Oil), VRDN, AMT, 4.10% due 10/01/2024 (a) 14,100
Saint Charles Parish, Louisiana, PCR, VRDN (a):
17,100 (Shell Oil Company--Norco Project), AMT, 4.10% due 11/01/2021 17,100
4,400 (Shell Oil Company Project), 3.70% due 6/01/2005 4,400
21,000 (Shell Oil Company Project), AMT, Series A, 4.10% due 10/01/2022 21,000
Saint James Parish, Louisiana, PCR, Refunding (Texaco Project), CP:
83,030 Series A, 3.60% due 10/08/1996 83,030
43,030 Series B, 3.60% due 10/08/1996 43,030
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Maine-- $ 16,000 Jay, Maine, Solid Waste Disposal Revenue Bonds (International Paper),
0.7% AMT, Series A, 3.95% due 6/02/1997 $ 16,000
Maine Health and Higher Educational Facilities Authority Revenue Bonds
(VHA New England Inc.), VRDN (a) (e):
1,250 Series B, 3.85% due 12/01/2025 1,250
1,450 Series F, 3.85% due 12/01/2025 1,450
27,000 Maine State, GO, TAN, 4.50% due 6/27/1997 27,120
7,000 Wiscasset, Maine, TAN, 4.15% due 11/01/1996 (j) 7,003
Maryland-- 35,700 Baltimore, Maryland, Port Facilities Revenue Bonds (Occidental
1.1% Petroleum), VRDN, 3.50% 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, 3.90% due 4/01/2035 12,300
24,200 (Saint Agnes Hospital--Daughters of Charity), 3.85% due 7/01/2013 24,200
10,000 Washington Suburban Sanitation District, Maryland, BAN, VRDN, UT, 3.80%
due 1/01/1999 (a) 10,000
Massachusetts-- 32,130 Clipper Tax Exempt Trust 1994-2, Massachusetts, VRDN, Class A, 3.69%
3.1% due 10/17/2002 (a) 32,130
20,900 Eagle Tax Exempt Trust, Massachusetts, VRDN, Series J, 4% due 8/01/2005 (a) 20,900
10,000 Lynn, Massachusetts, Water and Sewer Commission, BAN, Series A, 4.50%
due 10/11/1996 10,001
Massachusetts Bay Transportation Authority Notes:
76,550 Series A, 3.75% due 2/28/1997 76,598
43,500 Series B, 4.75% due 9/05/1997 43,792
12,000 Massachusetts Bay Transportation Authority Revenue Bonds (General
Transportation System), Series 1984-A, 3.625% due 3/01/1997 12,000
8,000 Massachusetts Pioneer Valley Transit Authority, RAN, 4.63% due 8/08/1997 8,035
2,000 Massachusetts State Municipal Wholesale Electric Company, Power Supply
System Revenue Bonds, VRDN, Series C, 3.75% due 7/01/2019 (a) 2,000
Massachusetts State Port Authority, Revenue Refunding Bonds, VRDN (a):
10,000 AMT, Series B, 4% due 7/01/2018 10,000
2,700 Series A, 3.95% due 7/01/2015 2,700
600 Massachusetts State, UPDATES, Series E, 3.95% due 12/01/1997 (a) 600
13,025 North Andover, Massachusetts, BAN, 4.25% due 1/23/1997 13,032
9,000 Springfield, Massachusetts, BAN, 4.60% due 7/11/1997 9,034
<PAGE>
Michigan-- 1,600 Delta County, Michigan, Economic Development Corp., Environmental
2.1% Improvement Revenue Bonds (Mead Escambia Paper), DATES, Series F, 3.95%
due 12/01/2013 (a) 1,600
13,700 Eagle Tax Exempt Trust, Michigan, VRDN, Series 94, Class 2201, 3.85%
due 6/01/2021 (a) 13,700
17,300 Grand Rapids, Michigan, Water Supply System, Revenue Refunding Bonds,
VRDN, 3.70% due 1/01/2020 (a) (f) 17,300
8,460 Holly, Michigan, Area School District, VRDN, UT, 3.95% due 5/01/2020 (a) (f) 8,460
100 Kent Hospital Finance Authority, Michigan, Hospital Facilities Revenue
Bonds (Butterworth Hospital), ACES, Series A, 4.10% due 1/15/2020 (a) 100
59,820 Michigan Municipal Bond Authority Revenue Notes, Series A, 4.50%
due 7/03/1997 60,091
4,250 Michigan State Hospital Finance Authority Revenue Bonds (Providence
Hospital--Daughters of Charity Systems, Incorporated), VRDN, 3.85%
due 11/01/2014 (a) 4,250
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Michigan Michigan State Strategic Fund, Limited Obligation Revenue Refunding
(concluded) Bonds, VRDN (a):
$ 5,000 (Consumers Power Company Project), Series A, 4.05% due 6/15/2010 $ 5,000
6,400 (Detroit Edison Co.), 4.05% due 9/01/2030 6,400
5,700 Michigan State Strategic Fund, PCR, Refunding (Consumers Power
Project), VRDN, Series A, 3.95% due 4/15/2018 (a) 5,700
1,000 Michigan State Strategic Fund, Solid Waste Disposal Revenue Bonds
(Grayling Generating Project), VRDN, AMT, 3.95% due 1/01/2014 (a) 1,000
9,500 Monroe County, Michigan, Economic Development Corp., Limited Obligation
Revenue Refunding Bonds (Detroit Edison Co.), VRDN, Series CC, 4.05%
due 10/01/2024 (a) 9,500
University of Michigan, University Hospital Revenue Bonds, VRDN,
Series A (a):
16,000 (Medical Service Plan), 3.90% due 12/01/2027 16,000
9,800 Refunding, 3.90% due 12/01/2019 9,800
Minnesota-- Eagle Tax Exempt Trust, Minnesota, VRDN (a):
0.9% 12,200 Series 1994-C-5, 4% due 2/01/2015 12,200
45,000 Series A, 4% due 8/01/2006 45,000
Minnesota State, HFA, S/F Mortgage Revenue Bonds:
1,100 AMT, Series O, 3.60% due 12/12/1996 1,100
12,715 Series M, 3.50% due 12/12/1996 12,715
Mississippi-- 10,000 Harrison County, Mississippi, PCR, Refunding (Du Pont de Nemours & Co.),
0.4% VRDN, 3.90% due 9/01/2010 (a) (k) 10,000
3,000 Mississippi Hospital Equipment and Facilities Authority Revenue Bonds
(Mississippi Baptist Medical Center), VRDN, Series B, 3.80% due 7/01/2012 (a) 3,000
21,900 Perry County, Mississippi, PCR, Refunding (Leaf River Forest Project),
VRDN, 3.75% due 3/01/2002 (a) 21,900
<PAGE>
Missouri-- 30,000 Eagle Tax Exempt Trust, Missouri, VRDN, Series 1993-E, 4% due 8/01/2006 (a) 30,000
1.6% Missouri Higher Education Loan Authority, Student Loan Revenue Bonds,
VRDN, AMT (a) (k):
7,800 Series A, 3.90% due 6/01/2017 7,800
11,700 Series B, 3.90% due 6/01/2020 11,700
16,655 Missouri State Environmental Improvement and Energy Resource Authority,
PCR (Union Electric Co. Project), UPDATES, Series B, 3.25% due 10/10/1996 (a) 16,655
Missouri State Health and Educational Facilities Authority, Health
Facilities Revenue Bonds (Sisters of Mercy Health System), VRDN (a):
20,000 Refunding, Series B, 3.80% due 12/01/2016 20,000
5,000 Series A, 3.80% due 6/01/2019 5,000
28,200 Saint Louis County, Missouri, IDA, Hospital Revenue Bonds (DePaul
Health Center--Daughters of Charity), VRDN, 3.85% due 11/01/2014 (a) 28,200
Montana-- 6,900 Billings, Montana, M/F Housing Revenue Bonds (West Park Retirement
0.1% Center), VRDN, 3.80% due 12/01/2007 (a) 6,900
Nebraska-- Nebraska Higher Education Loan Program, Multiple Mode Student Loan
1.1% Revenue Bonds, VRDN (a) (c) (k):
12,800 Series A, 3.90% due 12/01/2015 12,800
13,600 Series B, 3.90% due 12/01/2015 13,600
3,100 Series C, 3.90% due 12/01/2015 3,100
17,600 Series D, 3.90% due 12/01/2015 17,600
Nebraska Higher Education Loan Program, Student Loan Revenue Bonds,
VRDN, AMT (a) (k):
3,550 Series A, 4% due 12/01/2016 3,550
30,150 Series C, 4% due 8/01/2018 30,150
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Nevada-- $ 90,490 Clark County, Nevada, Airport Improvement Revenue Refunding Bonds, VRDN,
1.3% Series A, 3.80% due 7/01/2012 (a) (c) $ 90,490
7,075 Nevada Housing Division (Mesquite Bluffs Apartments), VRDN, AMT,
Series B, 3.90% due 5/01/2028 (a) 7,075
New 11,600 Hillsborough County, New Hampshire, GO, TAN, UT, 4.25% due 12/27/1996 11,617
Hampshire-- 1,400 New Hampshire Higher Educational and Health Facilities Authority
0.9% Revenue Bonds (VHA New England Inc.), VRDN, Series D, 3.85%
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% due 5/01/2021 (a) 38,400
5,700 New Hampshire State, HFA, M/F Housing Revenue Bonds (P.R.A.
Properties--Pheasant Run Project), VRDN, AMT, 3.90% due 5/01/2025 (a) 5,700
10,000 New Hampshire State, IDA, Solid Waste Disposal Revenue Bonds (United
Illuminating Co. Project), AMT, Series A, 3.75% due 3/03/1997 10,000
<PAGE>
New Jersey-- 20,000 Casino Reinvesment Development Authority, New Jersey (Corridor Project),
2.1% BAN, Series A, 4.50% due 6/03/1997 20,048
9,600 East Orange, New Jersey, GO, BAN, 4.75% due 8/28/1997 9,642
State of New Jersey, CP:
25,000 3.50% due 11/06/1996 25,000
25,000 3.50% due 11/12/1996 25,000
20,000 3.50% due 11/14/1996 20,000
Woodbridge Township, New Jersey, BAN, UT:
25,100 3.91% due 7/02/1997 25,113
36,120 3.96% due 8/01/1997 36,124
New Mexico-- 15,500 Albuquerque, New Mexico, Hospital Revenue Bonds (Saint Joseph's
0.9% Sisters of Charity), VRDN, 3.80% due 5/15/2022 (a) 15,500
Farmington, New Mexico, PCR (Arizona Public Service Co.), VRDN (a):
11,300 AMT, Series C, 4.10% due 9/01/2024 11,300
33,000 Refunding, Series A, 3.95% due 5/01/2024 33,000
1,500 Refunding, Series B, 3.75% due 9/01/2024 1,500
3,700 Hurley, New Mexico, PCR (Kennecott Santa Fe), VRDN, 3.95% due
due 12/01/2015 (a) 3,700
220 New Mexico Mortgage Finance Authority, S/F Mortgage Program, AMT,
Series A, 3.25% due 12/31/1996 (h) 220
1,130 New Mexico State Hospital Equipment Loan Council, Hospital Equipment
and Improvement Revenue Bonds, VRDN, 3.85% due 5/01/2009 (a) (c) 1,130
New York-- Eagle Tax Exempt Trust, New York, VRDN (a):
2.8% 23,700 4% due 11/15/2004 23,700
27,300 4% due 2/15/2007 27,300
7,100 Series 1994-C2, 3.95% due 6/15/2018 7,100
New York City, New York, GO, VRDN, UT (a):
2,980 Series B, Sub-Series B-4, 4.05% due 8/15/2023 (c) 2,980
3,000 Sub-Series A-7, 3.90% due 8/01/2019 3,000
1,400 New York City, New York, IDA, Civic Facilities Revenue Bonds (National
Audobon Society), VRDN, 3.90% due 12/01/2014 (a) 1,400
5,500 New York City, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds, VRDN, Series C, 3.95% due 6/15/2023 (a) (f) 5,500
63,000 New York City, New York, TAN, UT, Series A, 4.50% due 2/12/1997 63,184
32,200 New York City, New York, Transit Authority, Special Obligation,
RAN, Series A, 4.25% due 12/12/1996 32,239
6,500 New York State Dormitory Authority Revenue Bonds (Putters-14A), VRDN,
3.65% due 7/01/2008 (a) 6,500
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
New York $ 17,600 New York State, HFA, Revenue Bonds (East 84th Street), VRDN, AMT, Series
(concluded) A, 3.80% due 11/01/2028 (a) $ 17,600
16,550 New York State Power Authority, Revenue and General Purpose Bonds
(Junior Lien), 3.70% due 3/01/1997 16,550
5,600 Syracuse, New York, IDA, Civic Facility Revenue Bonds (Multi-Modal Syracuse
University Project), VRDN, 3.90% due 3/01/2023 (a) 5,600
<PAGE>
North Craven County, North Carolina, Industrial Facilities and Pollution Control
Carolina-- Financing Authority Revenue Bonds (Cravenwood Energy Project), VRDN,
1.5% AMT (a):
5,400 Series B, 4% due 5/01/2011 5,400
3,000 Series C, 4% due 5/01/2011 3,000
North Carolina Educational Facilities Finance Agency Revenue Bonds,
VRDN (a):
23,950 (Bowman Grey School of Medicine Project), 3.90% due 9/01/2020 23,950
20,240 (Duke University Project), Series A, 3.75% due 6/01/2027 20,240
15,000 (Duke University Project), Series B, 3.75% due 12/01/2021 15,000
North Carolina Medical Care Commission, Hospital
Revenue Bonds, VRDN (a):
1,700 (Duke University Hospital), Series B, 3.75% due 6/01/2015 1,700
2,000 (Duke University Hospital), Series C, 3.75% due 6/01/2015 2,000
28,500 (North Carolina Baptist Hospital Project), Series B, 3.80% due 6/01/2022 28,500
17,000 Wake County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (Carolina Power and Light Company
Project), DATES, 4.10% due 3/01/2017 (a) 17,000
North 13,000 North Dakota HFA, Home Mortgage Finance Revenue Bonds, Series C, 3.85%
Dakota--0.2% due 4/03/1997 13,000
Ohio--0.7% 10,500 Eagle Tax Exempt Trust, Ohio, VRDN, 3.95% due 7/01/2015 (a) 10,500
10,000 Greater Cleveland, Ohio, Regional Transportation Authority, BAN, 3.90%
due 10/17/1996 10,002
1,865 Ohio HFA, M/F Housing Revenue Bonds (Kenwood Congregate Retirement
Program), VRDN, 3.50% due 12/01/2015 (a) 1,865
19,000 Ohio HFA, Residential Mortgage Revenue Bonds, AMT, Series B-2, 3.80% due
3/03/1997 (i) 19,000
5,137 Ohio School District, COP (Cash Flow Borrowings Program), RAN, Series B,
4.53% due 6/30/1997 5,156
3,000 Scioto County, Ohio, Hospital Facilities Revenue Bonds (VHA Central Inc.--
Capital Asset), VRDN, Series C, 3.80% due 12/01/2025 (a) (e) 3,000
6,100 Scioto County, Ohio, Marine Terminal Facility, Revenue Refunding Bonds
(Norfolk Southern Corporation Project), VRDN, 3.85% due 8/15/2013 (a) 6,100
Oklahoma-- 20,000 Garfield County, Oklahoma, Industrial Authority, PCR, Refunding
1.4% (Oklahoma Gas and Electric Company Project), VRDN, Series A, 3.90%
due 1/01/2025 (a) 20,000
10,250 Grand River, Oklahoma, Dam Authority Revenue Bonds, VRDN, Series 42,
3.95% due 6/01/2009 (a) (e) 10,250
24,200 Muskogee, Oklahoma, Industrial Trust, PCR, Refunding (Oklahoma Gas and
Electric Co.), VRDN, Series A, 3.95% due 1/01/2025 (a) 24,200
Oklahoma State Industrial Authority Revenue Bonds (Baptist Medical Center):
10,500 Series A, 3.90% due 8/15/2024 10,500
40,500 Series B, 3.90% due 8/15/2023 40,500
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Oregon-- $ 8,900 Medford, Oregon, Hospital Facilities Authority Revenue Bonds
2.2% (Gross-Rogue Valley Health Services), VRDN, 4% due 10/01/2016 (a) $ 8,900
7,840 Oregon State, GO, Elderly and Disabled Housing, AMT, UT, Series C,
3.65% due 12/19/1996 7,840
Oregon State, GO, Veterans' Welfare Bonds, VRDN (a):
53,000 Series 73-E, 3.80% due 12/01/2016 53,000
15,000 Series 73-G, 3.80% due 12/01/2018 15,000
64,300 Series 73-H, 3.80% due 12/01/2019 64,300
10,740 Oregon State Housing and Community Services Department, S/F Mortgage
Revenue Bonds, Series F, 3.55% due 12/12/1996 10,740
8,000 Portland, Oregon, M/F Revenue Bonds (Multi Mode Housing--Union Station),
VRDN, AMT, 4% due 12/01/2027 (a) 8,000
Pennsylvania--- 27,000 Allegheny County, Pennsylvania, IDA, PCR (Duquesne Light Project), CP,
4.7% Series A, 3.70% due 2/21/1997 27,000
2,500 Butler County, Pennsylvania, IDA, IDR, Refunding (Wetterau Finance Co.
Project), VRDN, 3.85% due 12/01/2014 (a) 2,500
17,000 Eagle Tax Exempt Trust, Pennsylvania, VRDN, Series 94, Class 3803, 4%
due 5/01/2008 (a) 17,000
1,500 Geisinger, Pennsylvania, Health Systems Revenue Bonds, Series B, VRDN,
3.95% due 7/01/2022 (a) 1,500
30,000 Harrisburg, Pennsylvania, Revenue Bonds (Pooled Financing Fund), VRDN,
4.10% due 7/01/2021 (a) 30,000
3,700 Montgomery County, Pennsylvania, Higher Education and Health Authority,
Hospital Revenue Bonds (Holy Redeemer Hospital), VRDN, 3.80% due
9/01/2018 (a) (e) 3,700
13,000 Pennsylvania State, GO, VRDN, 4% due 5/01/2015 (a) 13,000
Pennsylvania State Higher Education Assistance Agency, Student Loan
Revenue Bonds, VRDN (a) (k):
5,400 AMT, Series A, 3.90% due 1/01/2018 5,400
69,950 AMT, Series A, 3.90% due 12/01/2024 69,950
70,000 AMT, Series B, 3.90% due 7/01/2018 70,000
30,800 Series E, 3.90% due 7/01/2018 30,800
Pennsylvania State Higher Educational Facilities Authority, College and
University Revenue Refunding Bonds (Carnegie Mellon University), VRDN (a):
5,000 Series B, 3.95% due 11/01/2027 5,000
1,600 Series C, 3.95% due 11/01/2029 1,600
8,400 Series D, 3.95% due 11/01/2030 8,400
15,000 Pennsylvania State Higher Educational Facilities Authority, Health System
Revenue Bonds (University of Pennsylvania), ACES, Series B, 3.80%
due 1/01/2024 (a) 15,000
2,000 Philadelphia, Pennsylvania, Hospital and Higher Education Facilities
Authority, Hospital Revenue Bonds (Children's Hospital of Philadelphia
Project), VRDN, 3.95% due 3/01/2027 (a) 2,000
33,600 Philadelphia, Pennsylvania, TRAN, Series A, 4.50% due 6/30/1997 33,733
20,880 Sayre, Pennsylvania, Health Care Facilities Authority Revenue Bonds (VHA of
Pennsylvania, Inc.--Capital Assets Financing Program), VRDN, Series L, 3.80%
due 12/01/2020 (a) (e) 20,880
<PAGE>
South 2,000 Berkeley County, South Carolina, PCR, Refunding (Amoco Chemical Co.
Carolina-- Project), VRDN, 3.90% due 7/01/2012 (a) 2,000
1.6% 12,950 Charleston County, South Carolina, Industrial Revenue Refunding Bonds
(Massey Coal Terminal), VRDN, 3.90% due 1/01/2007 (a) 12,950
35,000 Florence County, South Carolina, Solid Waste Disposal and Wastewater
Treatment Facilities Revenue Bonds (Roche Carolina Inc. Project), VRDN,
AMT, 4.10% due 4/01/2026 (a) 35,000
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
South $ 22,400 Orangeburg County, South Carolina, Solid Waste Disposal Facilities
Carolina Revenue Bonds (South Carolina Electric & Gas), VRDN, AMT, 4%
(concluded) due 11/01/2024 (a) $ 22,400
South Carolina Jobs, EDA, Revenue Bonds, VRDN (a):
7,200 AMT (Greenfield Industries Inc. Project), 4% due 3/01/2015 7,200
5,400 AMT (Wellman, Inc. Project), 4.10% due 12/01/2010 5,400
14,100 AMT (Wellman, Inc. Project), 4.10% due 12/01/2012 14,100
4,550 (Saint Francis Hospital Project), 4.05% due 7/01/2022 4,550
16,800 York County, South Carolina, PCR (NC Electric Project), 3.80% due 3/15/1997 16,800
Tennessee-- 16,000 Clarksville, Tennessee, Public Building Authority Revenue Bonds (Pooled
0.8% Financing--Tennessee Municipal Bond Fund), VRDN, 3.85% due 10/01/2025 (a) 16,000
9,400 Cleveland, Tennessee, IDB, Revenue Bonds (Newly Wed Foods Incorporated
Project), VRDN, AMT, 4% due 1/01/2012 (a) 9,400
8,100 Loudon, Tennessee, IDB, PCR, Refunding (A.E. Staley Manufacturing Co.
Project), VRDN, 3.90% due 9/01/2001 (a) 8,100
14,955 Morristown, Tennessee, IDB, PCR, Refunding (Akzo Chemicals, Inc.
Project), VRDN, 3.90% 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% due 12/01/2017 (a) 12,000
Texas--16.0% Brazos River Authority, Texas, PCR (Texas Utilities Electric Co.),
VRDN, AMT (a):
29,055 Refunding, Series B, 4.05% due 6/01/2030 29,055
41,455 Refunding, Series C, 4.10% due 6/01/2030 41,455
8,000 Series A, 4.10% due 4/01/2030 8,000
24,700 Brazos, Texas, Higher Education Authority Incorporated, Student Loan
Revenue Bonds, VRDN, AMT, Series B-1, 3.90% due 6/01/2023 (a) (k) 24,700
4,000 Corpus Christi, Texas, IDR (Dedietrich USA Incorporated Project), VRDN,
AMT, 4% due 11/01/2008 (a) 4,000
Dallas-Fort Worth, Texas, Regional Airport Revenue Bonds, VRDN (a):
10,000 3.75% due 11/01/2005 10,000
6,600 3.70% due 11/01/2015 (f) 6,600
<PAGE>
8,800 Grapevine, Texas, IDR, Airport Revenue Refunding Bonds (Southern Air
Transportation Project), VRDN, 3.85% due 3/01/2010 (a) 8,800
Greater Texas Student Loan Corp., Student Loan Revenue Refunding Bonds,
AMT (k):
15,000 Series A, 3.35% due 3/01/1997 15,000
4,250 Series B, 3.85% due 6/01/1997 4,250
7,000 Gulf Coast, Texas, Environmental Improvement Revenue Bonds (Amoco Oil Co.
Project), VRDN, 3.70% due 3/03/2009 (a) 7,000
Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds (Citgo
Petroleum Corp. Project), VRDN, AMT (a):
13,700 4.15% due 5/01/2025 13,700
15,400 4.15% due 4/01/2026 15,400
Gulf Coast Waste Disposal Authority, Texas, Solid Waste Disposal Revenue
Bonds (Amoco Oil Co. Project), VRDN, AMT (a):
5,700 4.10% due 7/01/2027 5,700
27,600 4.10% due 8/01/2023 27,600
Gulf Coast Waste Disposal Authority, Texas, PCR (Amoco Oil Co. Project),
VRDN, AMT (a):
22,500 4.10% due 5/01/2023 22,500
17,500 4.10% due 6/01/2024 17,500
4,400 Gulf Coast Waste Disposal Authority, Texas, PCR, Refunding (Exxon
Project), VRDN, AMT, 3.90% due 6/01/2020 (a) 4,400
17,710 Harris County, Texas, GO, VRDN, 3.95% due 8/15/2016 (a) (f) 17,710
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Texas Harris County, Texas, Health Facilities Development Corporation,
(continued) Hospital Revenue Bonds, VRDN (a):
$ 5,400 (Methodist Hospital), 3.95% due 12/01/2025 $ 5,400
3,000 (Saint Luke's Episcopal Hospital), Series B, 3.95% due 2/15/2016 3,000
9,100 (Saint Luke's Episcopal Hospital), Series C, 3.95% due 2/15/2016 9,100
12,900 (Saint Luke's Episcopal Hospital), Series D, 3.95% due 2/15/2016 12,900
7,100 Harris County, Texas, Industrial Development Corporation, PCR (Exxon
Project), DATES, Series 1984-A, 3.95% due 3/01/2024 (a) 7,100
46,100 Harris County, Texas, Industrial Development Corporation, Solid Waste
Disposal Revenue Bonds (Deer Park Limited Partnership), VRDN, AMT,
Series A, 4.15% due 2/01/2023 (a) 46,100
Harris County, Texas, Toll Road Revenue Bonds, VRDN (a):
25,000 Sub-Lien H, 3.80% due 8/01/2020 25,000
15,000 UT, Sub-Lien D, 3.70% due 8/01/2015 15,000
Hockley County, Texas, Industrial Development Corporation, PCR:
11,940 (Amoco Project), 3.60% due 11/01/1996 11,940
31,360 (Amoco Project--Standard Oil Co.), 3.75% due 3/01/1997 31,360
<PAGE> 11,000 Houston, Texas, Water and Sewer System Revenue Bonds, VRDN, 4% due
12/01/2020 (a) (c) 11,000
42,370 Lower Colorado River Authority, Texas, Revenue Refunding Bonds, VRDN,
3rd Junior Lien, 3.80% due 1/01/2013 (a) (c) 42,370
9,500 Lower Neches Valley, Texas, PCR (Chevron U.S.A. Inc. Project), 3.65% due
2/18/1997 9,500
25,200 Lubbock, Texas, Health Facilities Development Corporation Revenue Bonds
(Saint Joseph Health System), VRDN, Series A, 3.90% due 7/01/2013 (a) 25,200
North Texas Higher Education Authority Incorporated, Student Loan
Revenue Bonds, VRDN, AMT (a) (e) (k):
12,800 Series C, 3.90% due 4/01/2020 12,800
13,700 Series F, 3.90% due 4/01/2020 13,700
North Texas Higher Education Authority Incorporated, Student Loan
Revenue Refunding Bonds, VRDN, AMT (a) (k):
3,000 3.90% due 3/01/1999 3,000
27,900 3.90% due 3/01/2005 27,900
29,000 Series A, 3.90% due 4/01/2005 29,000
5,000 Series A, 3.90% due 4/01/2020 5,000
Panhandle Plains, Texas, Higher Education Authority Incorporated,
Student Loan Revenue Bonds, VRDN, AMT, Series A (a) (k):
29,000 3.90% due 6/01/2021 29,000
13,700 3.90% due 6/01/2025 13,700
4,700 Refunding, 3.90% due 6/01/2008 4,700
10,100 Port Arthur, Texas, Navigational District, PCR, Refunding (Texaco Inc.,
Project), VRDN, 4% due 10/01/2024 (a) 10,100
18,800 Port Corpus Christi, Texas, Industrial Development Corporation, Sewage
and Solid Waste Disposal Revenue Bonds (Citgo Petroleum Corp. Project),
VRDN, AMT, 4.15% due 4/01/2026 (a) 18,800
16,400 San Antonio, Texas, Higher Education Authority, Revenue Refunding Bonds
(Trinity University Project), VRDN, 3.90% due 4/01/2004 (a) 16,400
10,000 San Antonio, Texas, Hotel Occupancy Revenue Bonds, VRDN, 3.95% due
8/15/2019 (a) (f) 10,000
12,400 Southwest Texas, Higher Education Authority Incorporated, Revenue
Refunding Bonds (Southern Methodist University), VRDN, 3.95%
due 7/01/2015 (a) 12,400
10,300 Texas State, CP, Series 1993-A, 3.75% due 2/27/1997 10,300
29,500 Texas State, GO, Refunding (Veterans' Housing Assistance Fund-1),
VRDN, AMT, 3.80% due 12/01/2016 (a) 29,500
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Texas $ 28,400 Texas State, Multi-Modal Water Development Board, VRDN, Series A,
(concluded) 4.05% due 3/01/2015 (a) $ 28,400
25,000 Texas State, Public Finance Authority Revenue Bonds (General
Obligation), CP, Series A, 3.70% due 2/05/1997 25,000
307,500 Texas State, TRAN, 4.75% due 8/29/1997 309,741
27,430 Travis County, Texas, Health Facility Development Corporation
Revenue Bonds (Daughters of Charity--Seton Medical Center), VRDN,
3.85% due 11/01/2013 (a) 27,430
6,000 Travis County, Texas, Housing Finance Corporation, M/F Housing Revenue
Bonds (Broadmoor Apartments Project), AMT, 4.05% due 6/01/2026 (g) 6,000
Waco, Texas, Health Facilities Development Corporation, Health Facilities
Revenue Bonds (Daughters of Charity--Providence Hospital), VRDN (a):
18,160 3.85% due 11/01/2013 18,160
12,100 Series 88A, 3.85% due 11/01/2018 12,100
9,100 West Side Calhoun County, Texas, Development Corporation, PCR (Sohio
Chemical Company Project), UPDATES, 3.95% due 12/01/2015 (a) 9,100
4,200 West Side Calhoun County, Texas, Navigation District, Sewer and Solid
Waste Disposal Revenue Bonds (BP Chemicals Inc. Project), VRDN, AMT,
4.10% due 4/01/2031 (a) 4,200
Utah--1.3% Salt Lake County, Utah, PCR, Refunding (Service Station Holdings Project),
VRDN (a):
16,000 3.95% due 2/01/2008 16,000
22,300 Series B, 3.95% due 8/01/2007 22,300
7,000 Salt Lake County, Utah, TRAN, 4.50% due 12/31/1996 7,013
10,100 Utah County, Utah, Environmental Improvement Revenue Refunding Bonds
(USX Corp. Project), 3.65% due 3/03/1997 10,100
Utah State Board of Regents, Student Loan Revenue Bonds, VRDN, AMT (a) (e):
6,000 Series C, 3.90% due 11/01/2013 6,000
33,500 Series L, 3.90% due 11/01/2025 33,500
Vermont--0.4% 1,100 Vermont Higher Educational and Health Buildings, Financing Agency Revenue
Bonds (VHA--New England), VRDN, Series G, 3.85% due 12/01/2025 (a) (e) 1,100
30,675 Vermont State Student Assistance Corporation, Student Loan Revenue
Bonds, 3.70% due 1/01/2004 30,675
Virginia--0.3% 8,500 Eagle Tax Exempt Trust, Virginia, VRDN, Series 95, Class 7091, 3.95% due
1/15/2013 (a) 8,500
Rockingham County, Virginia, IDA, Revenue Bonds, VRDN (a):
1,000 4.30% due 10/01/2022 1,000
16,000 (Merck & Co. Project), Series A, 4.05% due 10/01/2020 16,000
<PAGE>
Washington-- 10,200 Snohomish County, Washington, Public Utility District No. 001, Electric
2.0% Revenue Bonds (Generation System), VRDN, 3.80% due 1/01/2025 (a) (c) 10,200
17,200 Washington State, GO, Tender Option, 3.60% due 10/01/1996 17,200
10,600 Washington State Housing Finance Commission, M/F Mortgage Revenue
Bonds (Courtside Apartments Project), VRDN, AMT, 4% due 1/01/2026 (a) 10,600
Washington State Public Power Supply System, Revenue Refunding Bonds
(Nuclear Project No. 3), VRDN (a):
23,365 Series 3A-1, 3.80% due 7/01/2018 23,365
52,785 Series 3A-2, 3.80% due 7/01/2018 52,785
Washington Student Loan Finance Association Revenue Bonds (Guaranteed
Student Loan Program), VRDN (a):
10,700 AMT, Series A, 4% due 12/01/2002 10,700
6,000 AMT, Series B, 4% due 12/01/2002 6,000
10,680 AMT, Series B, 3.70% due 1/01/2004 10,680
10,400 Second Series, 3.875% due 1/01/2001 10,400
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1996 (CONCLUDED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
West Virginia-- $ 9,500 Grant County, West Virginia, County Commission, IDR (Vepco
0.3% International) CP, 3.70% due 10/08/1996 $ 9,500
11,220 Hancock County, West Virginia, County Commission, IDR, Refunding
(The Boc Group Inc. Project), VRDN, 3.90% due 8/01/2005 (a) 11,220
Wisconsin-- Eagle Tax Exempt Trust, Wisconsin, VRDN, Series 94 (a):
1.9% 5,600 Class 4901, 4% due 9/01/2015 5,600
24,300 Class 4905, 4% due 10/01/2005 24,300
6,500 Hartland, Wisconsin, IDR (Commercial Communications Inc.--Hegwood LLC
Project), VRDN, AMT, 4.05% due 8/01/2009 (a) 6,500
30,000 Milwaukee, Wisconsin, RAN, Series A, 3.50% due 2/27/1997 30,060
40,000 Milwaukee, Wisconsin, School Order Revenue Notes, Series B, 4.25% due
8/21/1997 40,140
19,000 Pleasant Prairie, Wisconsin, PCR, Refunding (Wisconsin Electric & Power
Co.), VRDN, Series C, 3.85% due 9/01/2030 (a) 19,000
16,000 Sheboygan, Wisconsin, PCR, Refunding (Wisconsin Power and Light
Company Project), VRDN, Series A, 4.10% due 9/01/2015 (a) 16,000
2,200 Wisconsin State Health Facilities Authority Revenue Bonds (Saint Mary's
Hospital of Milwaukee--Daughters of Charity), VRDN, 3.85% due
11/06/2016 (a) 2,200
<PAGE>
Wyoming-- 18,000 Lincoln County, Wyoming, Environmental Improvement Revenue Bonds
1.1% (Pacificorp. Project), VRDN, AMT, 4.25% due 11/01/2025 (a) 18,000
Lincoln County, Wyoming, PCR:
10,450 (Amoco Project--Standard Oil Ltd.), 3.65% due 4/01/1997 10,450
5,800 (Exxon Project), AMT, Series A, 4.15% due 7/01/2017 (a) 5,800
11,100 Sweetwater County, Wyoming, Environmental Improvement Revenue Refunding
Bonds (Pacificorp Project), VRDN, AMT, 4.25% due 11/01/2025 (a) 11,100
18,000 Sweetwater County, Wyoming, PCR, Refunding (Pacificorp Project), VRDN,
3.80% due 7/01/2015 (a) 18,000
Uinta County, Wyoming, PCR:
12,400 (Amoco Oil Company Project), Series A, 3.98% due 12/01/1996 12,404
6,500 Refunding (Chevron USA Inc. Project), 3.70% due 8/15/2020 6,500
Total Investments (Cost--$7,649,357*)--100.8% 7,649,357
Liabilities in Excess of Other Assets--(0.8%) (64,371)
----------
Net Assets--100.0% $7,584,986
==========
<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, 1996.
(b)Prerefunded.
(c)MBIA Insured.
(d)FHA Insured.
(e)AMBAC Insured.
(f)FGIC Insured.
(g)FSA Insured.
(h)GNMA/FNMA Collateralized.
(i)GNMA Collateralized.
(j)Bank Qualified.
(k)SLMA Collateralized.
*Cost for Federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1996
<S> <C> <C>
Assets:
Investments, at value (identified cost--$7,649,356,860) (Note 1a) $ 7,649,356,860
Receivables:
Interest $ 42,583,666
Securities sold 21,766,815 64,350,481
---------------
Prepaid registration fees and other assets (Note 1d) 3,937,471
---------------
Total assets 7,717,644,812
---------------
<PAGE>
Liabilities:
Payables:
Securities purchased 126,963,396
Investment adviser (Note 2) 2,551,507
Distributor (Note 2) 1,940,119
Dividends to shareholders (Note 1e) 2,222
Beneficial interest redeemed 435 131,457,679
---------------
Accrued expenses and other liabilities 1,201,250
---------------
Total liabilities 132,658,929
---------------
Net Assets $ 7,584,985,883
===============
Net Assets Consist of:
Shares of beneficial interest, $0.10 par value, unlimited number of shares
authorized $ 758,965,812
Paid-in capital in excess of par 6,830,655,956
Undistributed investment income--net 56,772
Accumulated realized capital losses--net (Note 4) (4,692,657)
---------------
Net Assets--Equivalent to $1.00 per share based on 7,589,658,115 shares of
beneficial interest outstanding $ 7,584,985,883
===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1996
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 139,551,539
Expenses:
Investment advisory fees (Note 2) $ 15,338,499
Distribution fees (Note 2) 4,903,461
Transfer agent fees (Note 2) 839,298
Accounting services (Note 2) 270,194
Registration fees (Note 1d) 266,939
Custodian fees 120,826
Printing and shareholder reports 67,691
Professional fees 38,480
Trustees' fees and expenses 25,120
Pricing fees 22,458
Other 46,103
---------------
Total expenses 21,939,069
---------------
Investment income--net 117,612,470
Realized Loss on Investments--Net (Note 1c) (14,250)
---------------
Net Increase in Net Assets Resulting from Operations $ 117,598,220
===============
<PAGE>
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, 1996 March 31, 1996
<S> <C> <C>
Operations:
Investment income--net $ 117,612,470 $ 253,032,458
Realized gain (loss) on investments--net (14,250) 722,425
--------------- ---------------
Net increase in net assets resulting from operations 117,598,220 253,754,883
--------------- ---------------
Dividends to Shareholders (Note 1e):
Investment income--net (117,557,198) (252,865,367)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (117,557,198) (252,865,367)
--------------- ---------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 12,463,396,083 25,775,869,013
Net asset value of shares issued to shareholders in reinvestment of
dividends (Note 1e) 117,553,160 252,865,978
--------------- ---------------
12,580,949,243 26,028,734,991
Cost of shares redeemed (13,160,164,160) (25,257,428,388)
--------------- ---------------
Net increase (decrease) in net assets derived from beneficial interest
transactions (579,214,917) 771,306,603
--------------- ---------------
Net Assets:
Total increase (decrease) in net assets (579,173,895) 772,196,119
Beginning of period 8,164,159,778 7,391,963,659
--------------- ---------------
End of period* $ 7,584,985,883 $ 8,164,159,778
=============== ===============
<FN>
*Undistributed investment income--net $ 56,772 $ 1,500
=============== ===============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
For the
The following per share data and ratios have been derived Six Months
from information provided in the financial statements. Ended
Sept. 30, For the Year Ended March 31,
Increase (Decrease) in Net Asset Value: 1996 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Investment income--net .02 .03 .03 .02 .02
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.02) (.03) (.03) (.02) (.02)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment Return 2.95%* 3.32% 2.76% 1.96% 2.36%
========== ========== ========== ========== ==========
Ratios to Average Net Assets:
Expenses .55%* .55% .55% .55% .54%
========== ========== ========== ========== ==========
Investment income--net 2.95%* 3.26% 2.70% 1.94% 2.33%
========== ========== ========== ========== ==========
Supplemental Data:
Net assets, end of period (in thousands) $7,584,986 $8,164,160 $7,391,964 $7,911,960 $7,527,054
========== ========== ========== ========== ==========
<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 normal recurring nature. The following is a
summary of significant accounting policies followed by the Fund.
<PAGE>
(a) Valuation of investments--Invest-ments 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.
(e) Dividends and distributions to share-holders--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 issue
discounts. Net realized capital gains, if any, are normally
distributed annually after deducting prior years' loss carryforward.
The Fund may distribute capital gains more frequently than annually
in order to maintain the Fund's net asset value at $1.00 per share.
2. Investment Advisory Agreement and
Transactions with Affiliates:
The Fund has entered into an Investment Advisory Agreement with Fund
Asset Management, 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.
<PAGE>
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.
CMA TAX-EXEMPT FUND
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
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, 1996, the Fund had a net capital loss carryforward of
approximately $4,672,000, of which $2,414,000 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.
CMA TAX-EXEMPT FUND
<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, Massachusetts 02101
Transfer Agent
Merrill Lynch 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].
