CMA
CMA TAX-EXEMPT FUND
Annual Report
March 31, 1996
Merrill Lynch
BULL LOGO
Officers and Trustees
Arthur Zeikel--President and Trustee
Ronald W. Forbes--Trustee
Cynthia A. Montgomery--Trustee
Charles C. Reilly--Trustee
Kevin A. Ryan--Trustee
Richard R. West--Trustee
Terry K. Glenn--Executive Vice President
Vincent R. Giordano--Senior Vice President
Donald C. Burke--Vice President
Peter J. Hayes--Vice President
Kenneth A. Jacob--Vice President
Helen Marie Sheehan--Vice President
Gerald M. Richard--Treasurer
Robert Harris--Secretary
<PAGE>
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].
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.
CMA Tax-Exempt Fund
Box 9011
Princeton, NJ 08543-9011
TO OUR SHAREHOLDERS:
For the year ended March 31, 1996, CMA Tax-Exempt Fund paid
shareholders a net annualized yield of 3.32%*. As of March 31, 1996,
the Fund's 7-day yield was 2.86%.
<PAGE>
The Environment
As 1995 drew to a close and 1996 began, it appeared that the US
economy was losing momentum. Lackluster retail sales, increases in
initial unemployment claims (along with weak job and income growth),
and evidence of slowing in the manufacturing sector all suggested
that the rate of economic growth was slowing, with some forecasters
even suggesting the possibility of an imminent recession. With
inflationary pressures well subdued, these signs of economic
weakness led the Federal Reserve Board to follow a more
accommodative monetary policy.
However, investor perceptions regarding the rate of future economic
growth changed dramatically with the report of stronger-than-
expected employment data for February and March. As a result, the
consensus outlook regarding the direction of business activity
shifted from expectations of weakness to anticipation of a revival
in growth of the economy. Long-term interest rates rose, and the
Federal Reserve Board left monetary policy on hold.
Investors are likely to continue to focus on the probable direction
of economic activity and Federal Reserve Board monetary policy in
the weeks ahead. At this time, inflationary pressures do not seem to
be building and the manufacturing sector is still relatively weak,
which suggest that the economy is not on the verge of overheating.
Nevertheless, it is likely that any further indication of stronger
economic activity in the weeks ahead may add to investor concerns
that accelerating economic activity could lead to higher interest
rates.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
Investment Outlook & Strategy
Although interest rates were lower at the close of the six-month
period ended March 31, 1996, the period was one of the most volatile
since the bear market of 1994. Fixed-income investors continued to
be concerned about a sluggish economy and subdued inflation through
the end of 1995. This led to anticipation of further Federal Reserve
Board monetary policy easings and lower short-term interest rates.
The Federal Reserve Board eased monetary policy twice during the six-
month period ended March 31, 1996 by lowering the Federal Funds rate
25 basis points (0.25%) on each occasion. However, by mid-February,
shortly after the last Federal Reserve Board interest rate decrease,
investor psychology began to change as investors anticipated a
stronger economic environment in which inflation might rise and the
Federal Reserve Board would not ease monetary policy. In addition,
the severe winter weather and the Government shutdown made it very
difficult to interpret economic strength on such unreliable and
delayed data.
<PAGE>
Investor sentiment further deteriorated on March 8 when the
unemployment data for February showed a much stronger-than-expected
rise in non-farm payrolls of 705,000, while the unemployment rate
fell to 5.5% from 5.8%. The strength of this employment data
surprised investors causing interest rates to rise dramatically over
several trading sessions. Interest rates were so volatile during the
six-month period ended March 31, 1996, the yield on the one-year US
Treasury bill fell nearly 90 basis points between October 2, 1995
and February 15, 1996. However, by March 31, 1996, the yield rose
over 65 basis points, giving back in five weeks two-thirds of the
gains achieved in the previous four and a half months.
Interest rates on short-term tax-exempt notes followed much of the
same pattern as their taxable counterparts. Dwindling supply and
strong demand, especially in January, caused interest rates to fall
nearly 70 basis points on nine-month tax-exempt notes from October
1995 to January 1996. However, as demand began to subside in late
January and the interest rate environment became less favorable,
interest rates rose in February and March, retracing all but 30
basis points of the gains made in the prior months. Assets of the
tax-exempt money fund industry rose from $128.6 billion at the
outset of the period to over $136.0 billion at March 31, 1996, its
highest level ever. Meanwhile, new-issue supply during the six-month
period fell $11.1 billion or 43% from the $25.7 billion that was
issued in the previous six-month period.
Despite this strong demand in an environment of relatively modest
new issuance, interest rates on variable rate demand instruments did
not fall accordingly, as the dealers high cost of financing
inventory kept rates at attractive levels throughout most of the six-
month period ended March 31, 1996. Thus the yield curve for
securities with maturities under one year remained relatively flat,
and often inverted, during the period, making a maturity extension
unattractive. In such an environment, the Fund would not receive any
incremental yield premium for taking on the additional interest rate
risk.
CMA Tax-Exempt Fund continued to maintain a relatively short average
portfolio maturity, a decision prompted by the flat yield curve and
a less-favorable interest rate environment. This strategy benefited
performance over most of the last 12 months by allowing the Fund to
take advantage of high interest rates on variable rate demand notes,
while limiting the Fund's exposure to interest rate risk from market
volatility. We anticipate maintaining this maturity range until a
clearer picture emerges as to the strength of the economy, and as we
await a heavier new-issue calendar in the early summer when munici-
palities undertake their yearly budget financing. Diversification
and credit quality remain paramount to the Fund as we review investment
opportunities.
<PAGE>
In Conclusion
We thank you for your support of CMA Tax-Exempt Fund, and we look
forward to serving your investment needs in the future.
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
May 10, 1996
Portfolio Abbreviations for CMA Tax-Exempt Fund
<PAGE>
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
HDA Housing Development Authority
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
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
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Alabama-- $ 25,000 Birmingham, Alabama, Medical Clinic Board Revenue Bonds
1.9% (U.A.H.S.F.), VRDN, 3.60% due 12/01/2026 (a) $ 25,000
Columbia, Alabama, IDB, PCR, Refunding (Alabama Power Co.
Project), VRDN (a):
14,600 Series A, 3.50% due 5/01/2022 14,600
8,200 Series C, 3.25% due 10/01/2022 8,200
9,000 Series E, 3.60% due 10/01/2022 9,000
9,800 Decatur, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Amoco
Chemical Co. Project), VRDN, AMT, 3.60% due 5/01/2025 (a) 9,800
20,000 Jefferson County, Alabama, Sewer Revenue Warrants, VRDN, Series A,
3.45% due 9/01/2025 (a) 20,000
7,600 McIntosh, Alabama, IDB, PCR (Ciba-Geigy Corporation Project), VRDN,
Series A, 3.35% due 12/01/2003 (a) 7,600
37,900 McIntosh, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Ciba-
Geigy Corporation Project), VRDN, AMT, 3.35% due 7/01/2004 (a) 37,900
11,600 Mobile, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project),
VRDN, 3.50% due 6/01/2015 (a) 11,600
10,000 Parrish, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project),
VRDN, 3.50% due 6/01/2015 (a) 10,000
<PAGE>
Alaska-- Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Exxon
1.3% Pipeline Co. Project), VRDN (a):
20,000 Series A, 3.55% due 12/01/2033 20,000
60,000 Series B, 3.55% due 12/01/2033 60,000
29,000 Series C, 3.55% due 12/01/2033 29,000
Arizona-- 26,300 Apache County, Arizona, IDA, IDR (Tucson Electric Power Co.--
2.3% Springerville Project), VRDN, Series B, 3.40% due 12/15/2018 (a) 26,300
10,200 Arizona Educational Loan Marketing Revenue Bonds, VRDN, AMT,
Series A, 3.60% due 3/01/2015 (a) (c) 10,200
8,000 Coconino County, Arizona, Pollution Control Corporation Revenue
Bonds(Arizona Public Service Co.--Navajo Project), VRDN, AMT,
Series A, 3.60% 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, 3.50% due
12/01/2008 (a) (c) 5,300
21,500 Maricopa County, Arizona, PCR (El Paso Electric Co. Project), VRDN,
Series A, 3.70% due 7/01/2014 (a) 21,500
Maricopa County, Arizona, PCR, Refunding (Arizona Public Service
Co.),VRDN (a):
38,800 Series A, 3.60% due 5/01/2029 38,800
32,000 Series C, 3.50% due 5/01/2029 32,000
19,700 Series D, 3.50% due 5/01/2029 19,700
4,200 Series E, 3.50% due 5/01/2029 4,200
14,200 Series F, 3.50% due 5/01/2029 14,200
2,300 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont Mining Corp.),
VRDN, 3.35% due 12/01/2009 (a) 2,300
6,000 Salt River Project, Arizona, Agricultural Improvement and Power
District, Electric System Revenue Bonds, CP, 3.30% due 4/10/1996 6,000
Arkansas-- 3,800 Arkansas State Student Loan Authority Revenue Bonds, VRDN, AMT,
0.3% Series B-4, 3.40% due 6/01/2013 (a) 3,800
19,000 Little River County, Arkansas, Solid Waste Disposal Revenue Bonds
(Nekoosa Papers Incorporated Project), VRDN, AMT, 3.50% due
2/01/2025 (a) 19,000
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
California-- $ 40,000 California Higher Education Loan Authority, Inc., Student Loan
7.0% Revenue Bonds, AMT, Series C, 3.35% due 6/01/1996 $ 40,000
California Higher Education Loan Authority, Inc., Student Loan
Revenue Refunding Bonds:
20,000 AMT, Series A, 3.45% 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, 3.50% due 12/01/2022 (a) 33,000
50,000 California Public Capital Improvements Financing Authority Revenue
Bonds (Pooled Loan Project), Series D, 3.40% due 6/15/1996 50,000
307,145 California State, RAW, Series C, 5.75% due 4/25/1996 307,415
17,700 Eastern Municipal Water District, California, Water and Sewer Revenue
Refunding Bonds, VRDN, COP, Series B, 3% due 7/01/2020 (a) (f) 17,700
51,500 Los Angeles County, California, Metropolitan Transportation Authority,
Sales Tax Revenue Refunding Bonds (Proposition C--Second Senior Bonds),
VRDN, Series A, 3% due 7/01/2020 (a) (c) 51,500
12,700 San Jose, California, Redevelopment Agency, Tax Allocation Revenue
Refunding Bonds (Merged Area Redevelopment Project), Series A,
7.80% due 8/01/1996 (b) 13,122
Colorado-- 4,980 Arapahoe County, Colorado, School District Number 005, Refunding
1.1% (Cherry Creek), UT, Series A, 4.50% due 12/15/1996 5,017
Colorado Health Facilities Authority Revenue Bonds, VRDN (a):
6,800 (North Colorado Medical Center), 3.35% due 5/15/2020 (c) 6,800
10,700 (Sisters of Charity Health Services), 3.35% due 5/15/2025 10,700
Denver, Colorado, City and County Airport Revenue Bonds, VRDN,
AMT (a):
10,500 Series F, 3.60% due 11/15/2025 10,500
11,500 Series G, 3.60% due 11/15/2025 11,500
5,000 Denver, Colorado, City and County Water, GO, Refunding, UT,
5% due 10/01/1996 5,040
4,755 Moffat County, Colorado, PCR, Refunding (Pacific Corporation Project),
VRDN, 3.60% due 5/01/2013 (a) (e) 4,755
14,755 Palomino Park, Colorado, Assessment Lien Revenue Bonds (Public
Improvements Corporation), VRDN, 3.50% due 12/01/2035 (a) 14,755
Pitkin County, Colorado, IDR, Refunding (Aspen Skiing Co. Project),
VRDN (a):
6,500 AMT, Series B, 3.45% due 4/01/2014 6,500
2,700 Series A, 3.40% due 4/01/2016 2,700
8,000 Westminster, Colorado, IDR, Refunding (Ball Corp. Project), VRDN, 3.45%
due 6/01/2005 (a) 8,000
<PAGE>
Connecticut-- 15,535 Connecticut State Economic Recovery Notes, Refunding, UT, 4.25% due
0.8% 12/15/1996 15,594
18,600 Connecticut State, HFA, Housing Mortgage Finance Program, VRDN,
Series G, 3.30% due 5/15/2018 (a) (e) 18,600
12,200 Connecticut State Special Assessment Unemployment Compensation,
Advanced Fund Revenue Bonds (Connecticut Unemployment), VRDN,
Series B, 3.60% due 11/01/2001 (a) 12,200
13,200 Eagle Tax-Exempt Trust, Connecticut, VRDN, 3.47% due 8/15/2012 (a) 13,200
6,500 Mashantucket, Connecticut, Western Pequot Tribe, CP, 3.40% due
8/14/1996 6,500
Delaware-- Delaware State, EDA, Revenue Bonds (Delmarva Power & Light Co.
0.1% Project), VRDN, AMT (a):
4,400 3.65% due 10/01/2017 4,400
2,100 Series A, 3.65% due 10/01/2017 2,100
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
District of $ 2,300 District of Columbia, General Fund Recovery Bonds, VRDN, UT,
Columbia-- Series B-3, 3.40% due 6/01/2003 (a) $ 2,300
0.7% 17,600 District of Columbia, Hospital Revenue Bonds (Providence
Hospital--Daughters of Charity), VRDN, Series 89-A, 3.40% due
12/01/2019 (a) 17,600
11,800 District of Columbia, Revenue Bonds (George Washington University),
VRDN, Series A, 3.65% due 3/01/2006 (a) 11,800
26,700 Eagle Tax-Exempt Trust, District of Columbia, VRDN, Series 1994-A,
3.52% due 6/01/2005 (a) 26,700
<PAGE>
Florida-- 3,400 Broward County, Florida, HFA, M/F Housing Revenue Bonds (Margate
3.2% Investments Projects), VRDN, 3.30% due 11/01/2005 (a) 3,400
36,100 Dade County, Florida, Aviation Revenue Refunding Bonds, VRDN, Series V,
3.40% due 10/01/2007 (a) 36,100
11,700 Dade County, Florida, IDA, Revenue Refunding Bonds (Florida Power &
Light Co.), VRDN, 3.50% due 6/01/2021 (a) 11,700
Dade County, Florida, Solid Waste Authority, IDR (Montenay-Dade Limited
Project), VRDN (a):
15,115 AMT, 3.60% due 12/01/2010 15,115
700 Series A, 3.60% due 12/01/2013 700
6,900 Dade County, Florida, Special Obligation, Capital Asset Acquisition
Revenue Bonds, VRDN, 3.85% due 10/01/2010 (a) 6,900
34,000 Dade County, Florida, Water and Sewer System Revenue Bonds, VRDN,
3.30% due 10/05/2022 (a) (f) 34,000
10,720 Florida State Municipal Power Agency, Revenue Refunding Bonds (Saint
Lucie Project), 7.375% due 10/01/1996 (b) 11,127
25,000 Florida State Turnpike Authority, Turnpike Revenue Bonds, VRDN,
Series A, 3.50% due 7/01/2025 (a) 25,000
Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric
Company Project), VRDN (a):
900 3.50% due 5/15/2018 900
6,300 3.60% due 9/01/2025 6,300
15,400 Jacksonville, Florida, PCR, Refunding (Florida Power & Light Co.
Project), VRDN, 3.50% due 5/01/2029 (a) 15,400
12,200 Martin County, Florida, PCR, Refunding (Florida Power & Light Co.
Project), VRDN, 3.30% due 9/01/2024 (a) 12,200
15,000 Palm Beach County, Florida, School District Revenue Bonds, TAN, 4.50%
due 9/27/1996 15,050
4,900 Palm Beach County, Florida, Water and Sewer Revenue Bonds, VRDN, 3.35%
due 10/01/2011 (a) 4,900
3,200 Pinellas County, Florida, Health Facilities Authority, Revenue Refunding
Bonds (Pooled Hospital Loan Program), DATES, 3.35% due 12/01/2015 (a) 3,200
42,890 Saint Lucie County, Florida, PCR, Refunding Bonds (Florida Power &
Light Co. Project), VRDN, 3.30% due 1/01/2026 (a) 42,890
4,900 Saint Lucie County, Florida, Solid Waste Disposal Revenue Bonds (Florida
Power & Light Co. Project), VRDN, AMT, 3.65% due 1/01/2027 (a) 4,900
7,800 Sunshine State, Governmental Financing Commission Revenue Bonds, CP,
Series B, 3.25% due 4/09/1996 7,800
6,860 Volusia County, Florida, Health Facilities Authority Revenue Bonds
(Pooled Hospital Loan Program), ACES, 3.55% due 11/01/2015 (a) (f) 6,860
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Georgia-- Burke County, Georgia, Development Authority, PCR (Georgia
3.2% Power Company--Plant Vogtle Project), VRDN (a):
$ 12,600 2nd Series, 3.50% due 4/01/2025 $ 12,600
4,300 3rd Series, 3.45% due 7/01/2024 4,300
28,900 4th Series, 3.25% due 7/01/2024 28,900
30,000 4th Series, 3.50% due 9/01/2025 30,000
8,600 Refunding, 3rd Series, 3.50% due 9/01/2025 8,600
15,200 Burke County, Georgia, Development Authority, PCR (Oglethorpe
Power Corporation), VRDN, Series A, 3.30% due 1/01/2016 (a) (f) 15,200
22,400 Eagle Tax-Exempt Trust, Georgia, VRDN, Series 1994-B, 3.52% due
1/04/2004 (a) 22,400
8,938 Georgia Municipal Association, Pooled Bonds, COP, VRDN, 3.20% 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) 4,209
10,935 Georgia State Residential Finance Authority, Home Ownership Mortgage
Revenue Bonds, AMT, Series A, 3.70% due 6/01/1996 (d) 10,935
5,035 Georgia State Residential Finance Authority, S/F Insured Mortgage
Revenue Bonds, AMT, Series A, 3.70% due 6/01/1996 (d) 5,035
10,250 Gwinnett County, Georgia, Water and Sewer Authority, Revenue
Refunding Bonds, 8.75% due 8/01/1996 (b) 10,623
12,200 Hapeville, Georgia, Development Authority, IDR (Hapeville Hotel
Ltd.), VRDN, 3.55% due 11/01/2015 (a) 12,200
Monroe County, Georgia, Development Authority, PCR (Georgia Power
Co.), VRDN (a):
11,600 1st Series, 3.50% due 7/01/2025 11,600
24,900 2nd Series, 3.25% due 7/01/2025 24,900
Municipal Electric Authority, Georgia, CP:
28,650 3.40% due 4/24/1996 28,650
5,000 3.35% due 5/07/1996 5,000
20,575 Municipal Electric Authority, Georgia, General Resolution Revenue
Bonds, VRDN, Series B, 4.25% due 6/01/2020 (a) 20,604
Idaho--0.1% 7,250 Custer County, Idaho, PCR (Amoco Project), 3.40% due 10/01/1996 7,250
<PAGE>
Illinois-- 7,000 Chicago, Illinois, IDR (Enterprise Center VIII Project), VRDN, AMT,
10.6% 3.65% 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, 3.40% due 1/01/2015 6,830
20,700 Series C, 3.35% due 1/01/2018 20,700
14,800 Chicago, Illinois, O'Hare International Airport, Special Facilities
Revenue Bonds (Compagnie Nationale, Air France), VRDN, AMT,
3.45% due 5/01/2018 (a) 14,800
Chicago, Illinois, Tender Notes:
51,000 3.10% due 2/04/1997 51,000
35,000 CP, Series C, 3.95% due 8/08/1996 35,000
25,395 Series B, 3.75% due 5/01/1996 25,395
23,600 VRDN, Series B, 3.35% due 1/01/2012 (a) 23,600
42,100 Cook County, Illinois, Tender Notes, VRDN, Series A, 3.45% due
3/01/2000 (a) 42,100
13,800 Eagle Tax-Exempt Trust, Illinois, VRDN, Series 95, Class 7090,
3.47% due 1/01/2024 (a) 13,800
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Illinois Illinois Development Finance Authority, VRDN (a):
(concluded) $ 42,200 PCR, Refunding (Commonwealth Edison Company Project), Series B,
3.35% due 10/15/2014 $ 42,200
60,100 Revenue Bonds (Lyric Opera Chicago Project), 3.40% due 12/01/2028 60,100
8,860 Revenue Bonds (Residential Rental--River Oaks Project), AMT,
3.40% due 12/15/2019 8,860
6,000 Revenue Refunding Bonds (Olin Corporation Project), Series A,
3.50% due 6/01/2004 6,000
Illinois Educational Facilities Authority Revenue Bonds, VRDN (a):
16,300 (Art Institute of Chicago), 3.45% due 3/01/2027 16,300
5,200 (Chicago Historical Society), 3.40% due 12/01/2025 5,200
26,400 (Illinois Institute of Technology), Series A, 3.40% due 9/01/2025 26,400
Illinois HDA, Revenue Bonds (Homeowner Mortgage):
8,980 AMT, Sub-Series E-2, 3.75% due 9/03/1996 8,980
8,010 Sub-Series E-1, 3.65% due 9/03/1996 8,010
Illinois Health Facilities Authority Revenue Bonds:
38,600 (Evangelical Hospital Corporation), VRDN, Series A, 3.35% due
1/01/2010 (a) 38,600
29,550 (Franciscan Sisters Health Service), VRDN, 3.50% due 1/01/2018
(a) 29,550
15,100 (Highland Park Hospital), Series B, 4% due 6/01/1996 (f) 15,100
8,600 (Hospital Sisters Services, Inc.), UPDATES, Series E, 3.30% due
12/01/2014 (a) (c) 8,600
20,000 (Lutheran Institute), VRDN, Series C, 3.35% due 4/01/2015 (a) 20,000
22,800 (Northwest Community Hospital), VRDN, 3.70% due 7/01/2025 (a) 22,800
25,300 (Northwestern Memorial Hospital), VRDN, 3.30% due 8/15/2025 (a) 25,300
11,300 (Resurrection Health Care System), VRDN, 3.40% due 5/01/2011 (a) 11,300
25,400 (Revolving Fund), CP, Series A, 3.25% due 8/06/1996 25,400
7,000 (Revolving Fund, Pooled Financing Program), VRDN, Series F,
3.40% due 8/01/2015 (a) 7,000
Illinois Health Facilities Authority Revenue Bonds (Evanston
Hospital Corporation Project):
25,000 CP, 4% due 5/15/1996 25,000
10,000 CP, 3.35% due 12/27/1996 10,000
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:
25,000 RAN, 4.50% due 4/12/1996 25,007
66,300 RAN, 4.50% due 5/10/1996 66,349
10,000 Refunding, 4% due 6/01/1996 10,003
11,500 Illinois State Toll Highway Authority, Revenue Refunding Bonds
(Toll Highway Priority), VRDN, Series B, 3.30% due 1/01/2010
(a) (c) 11,500
5,000 Illinois Student Assistance Commission, Student Loan Revenue Bonds,
VRDN, AMT, Series A, 3.55% due 3/01/2016 (a) 5,000
11,100 Southwestern Illinois Development Authority, Solid Waste Disposal
Revenue Bonds (Shell Oil Co.--Wood River Project), VRDN, AMT, 3.60%
due 8/01/2021 (a) 11,100
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Indiana-- Fort Wayne, Indiana, Hospital Authority Revenue Bonds (Parkview
2.6% Memorial Hospital), VRDN (a):
$ 1,645 Series B, 4.25% due 1/01/2016 $ 1,645
2,700 Series B, 4.25% due 1/01/2020 2,700
3,505 Series C, 4.25% due 1/01/2016 3,505
5,670 Series D, 4.25% due 1/01/2016 5,670
Indiana Health Facilities Financing Authority, Hospital Revenue
Bonds, ACES (a):
5,400 (Daughters of Charity National Health System), Series A, 3.40%
due 11/01/2022 5,400
1,700 (Daughters of Charity National Health System), Series B, 3.40%
due 11/01/2022 1,700
7,900 (Methodist Hospital of Indiana, Inc.), Series B, 3.40% due
9/01/2022 7,900
34,200 (Methodist Hospital of Indiana, Inc.), Series C, 3.40% due
9/01/2022 34,200
Indiana Secondary Market Educational Loans Incorporated, Student
Loan Revenue Bonds, VRDN, AMT, Series B (a) (e):
26,900 3.50% due 12/01/2013 26,900
22,500 3.50% due 12/01/2014 22,500
Indianapolis, Indiana, Local Public Improvement Bond Bank Notes, UT:
6,750 Series E, 4.50% due 7/11/1996 6,765
2,000 Series H, 4.50% due 7/11/1996 2,004
14,900 Jasper County, Indiana, PCR, Refunding (Northern Indiana Public
Service Co.), VRDN, Series C, 3.60% due 4/01/2019 (a) 14,900
46,240 Marion County, Indiana, Hospital Authority, Hospital Facility Revenue
Bonds (Saint Vincent's Hospital and Healthcare and Stress Center--
Daughters of Charity), VRDN, 3.40% due 11/01/2013 (a) 46,240
Purdue University, Indiana, University Revenue Bonds (Student Fees),
VRDN (a):
5,000 Series K, 3.35% due 7/01/2020 5,000
4,400 Series L, 3.35% due 7/01/2020 4,400
17,600 Rockport, Indiana, PCR, Refunding (AEP Generating Co. Project), VRDN,
Series A, 3.45% due 7/01/2025 (a) (e) 17,600
<PAGE>
Iowa-- 5,000 Chillicothe, Iowa, PCR, Refunding (Iowa-Illinois Gas & Electric
1.1% Project), VRDN, 3.45% due 1/01/2023 (a) 5,000
Iowa Finance Authority, Solid Waste Disposal Revenue Bonds (Cedar
River Paper Company Project), VRDN, Series A (a):
19,800 3.60% due 7/01/2023 19,800
29,400 AMT, 3.60% due 6/01/2024 29,400
20,500 AMT, 3.60% due 5/01/2025 20,500
3,700 Iowa Higher Education Loan Authority Revenue Bonds (Private College
Facilities), ACES, 3.80% due 12/01/2015 (a) (c) 3,700
14,500 Iowa Student Loan Liquidity Corporation, Student Loan Revenue Bonds,
VRDN, AMT, Series B, 3.40% due 12/01/2013 (a) (e) 14,500
Kansas-- 26,800 Butler County, Kansas, Solid Waste Disposal and Cogeneration Revenue
0.9% Bonds (Texaco Refining and Marketing Project), VRDN, AMT, Series B,
3.70% due 8/01/2024 (a) 26,800
9,100 Butler County, Kansas, Solid Waste Disposal Facilities Revenue Bonds
(Texaco Refining and Marketing Project), VRDN, AMT, Series A, 3.60%
due 8/01/2024 (a) 9,100
23,700 Kansas State, Department of Transportation, Highway Revenue Bonds,
VRDN, Series B, 3.30% due 9/01/2014 (a) 23,700
Wichita, Kansas, Hospital Revenue Bonds (CSJ Health Systems),
VRDN (a):
1,400 3.70% due 10/01/2002 1,400
15,300 3.70% due 10/01/2008 15,300
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Kentucky-- $ 5,100 Ashland, Kentucky, PCR (Merck & Co./Calgon Carbon Project),
1.1% VRDN, 3.40% 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, 3.60%
due 11/01/2024 (a) 22,700
Daviess County, Kentucky, Solid Waste Disposal Facilities Revenue
Bonds (Scott Paper Co. Project), VRDN, AMT (a):
28,200 Series A, 3.60% due 12/01/2023 28,200
5,000 Series A, 3.60% due 5/01/2024 5,000
14,500 Series B, 3.60% due 12/01/2023 14,500
4,500 Series B, 3.60% due 5/01/2024 4,500
8,600 Kentucky Economic Development Finance Authority Revenue Bonds
(Sisters of Charity), VRDN, 3.70% due 11/01/2020 (a) 8,600
<PAGE>
Louisiana-- 31,500 Calcasieu Parish, Louisiana, IDB, Environmental Revenue Refunding
3.2% Bonds (Citgo Petroleum Corporation), VRDN, AMT, 3.65% due 3/01/2025
(a) 31,500
8,800 Eagle Tax-Exempt Trust, Louisiana, VRDN, Series 94, Class 3803, 3.52%
due 5/01/2008 (a) 8,800
3,600 East Baton Rouge Parish, Louisiana, PCR, Refunding (Exxon Project),
VRDN, 3.50% due 3/01/2022 (a) 3,600
Louisiana Public Facilities Authority, Hospital Revenue Bonds:
5,200 (Hospital Equipment Financing and Refunding Program), VRDN,
Series A, 3.85% due 12/01/2005 (a) 5,200
20,900 (Our Lady Lake Regional Medical Center), CP, 3.25% due 4/08/1996 (g) 20,900
17,000 Louisiana Public Facilities Authority Revenue Bonds (Kenner Hotel
Ltd.), VRDN, 3.55% due 12/01/2015 (a) 17,000
12,485 Louisiana State Offshore Terminal Authority, Deepwater Port Revenue
Refunding Bonds, VRDN, Series A, 3.60% due 9/01/2008 (a) 12,485
10,200 Plaquemines Parish, Louisiana, Environmental Revenue Bonds (BP
Exploration & Oil), VRDN, AMT, 3.60% due 10/01/2024 (a) 10,200
Saint Charles Parish, Louisiana, PCR, VRDN (a):
17,100 (Shell Oil Company--Norco Project), AMT, 3.60% due 11/01/2021 17,100
4,400 (Shell Oil Company Project), 3.25% due 6/01/2005 4,400
13,600 (Shell Oil Company Project), AMT, Series A, 3.60% due 10/01/2022 13,600
Saint James Parish, Louisiana, PCR, Refunding (Texaco Project), CP:
82,030 Series A, 3.35% due 5/10/1996 82,030
34,130 Series B, 3.35% due 5/10/1996 34,130
Maine-- Maine Health and Higher Educational Facilities Authority Revenue
0.0% Bonds (VHA New England Inc.), VRDN (a) (e):
1,250 Series B, 3.30% due 12/01/2025 1,250
1,450 Series F, 3.30% due 12/01/2025 1,450
Maryland-- 35,700 Baltimore, Maryland, Port Facilities Revenue Bonds (Occidental
1.0% Petroleum), VRDN, 3.35% due 10/14/2011 (a) 35,700
8,400 Maryland State, Department of Transportation, GO (Consolidated
Transportation), 6.40% due 7/15/1996 8,471
Maryland State Health and Higher Educational Facilities Authority
Revenue Bonds, VRDN (a):
12,300 (Pooled Loan Program), Series A, 3.40% due 4/01/2035 12,300
24,600 (Saint Agnes Hospital--Daughters of Charity), 3.40% due 7/01/2013 24,600
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Massachusetts-- $ 32,130 Clipper Tax-Exempt Trust 1994-2, Massachusetts, VRDN, Class A,
3.5% 3.41% due 10/17/2002 (a) $ 32,130
Eagle Tax-Exempt Trust, Massachusetts, VRDN (a):
25,000 3.52% due 10/01/2007 25,000
20,900 Series J, 3.52% due 8/01/2005 20,900
10,000 Lynn, Massachusetts, Water and Sewer Commission, BAN, Series A,
4.50% due 10/11/1996 10,017
Massachusetts Bay Transportation Authority Notes:
54,150 Series A, 3.75% due 2/28/1997 54,240
101,200 Series B, 4.75% due 9/06/1996 101,691
9,100 Massachusetts State Health and Educational Facilities Authority
Revenue Bonds (Capital Asset Program), VRDN, Series D, 3.30% due
1/01/2035 (a) (c) 9,100
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, 3.10% due 7/01/2019 (a) 2,000
12,900 Massachusetts State Port Authority, Revenue Refunding Bonds, VRDN,
AMT, Series B, 3.35% due 7/01/2018 (a) 12,900
1,000 Massachusetts State, UPDATES, Series E, 3.15% due 12/01/1997 (a) 1,000
6,700 Springfield, Massachusetts, BAN, 3.75% due 7/12/1996 6,711
Michigan-- 6,500 Delta County, Michigan, Economic Development Corp., Environmental
3.3% Improvement Revenue Refunding Bonds (Mead Escambia Paper), VRDN,
Series D, 3.40% 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 15,009
17,700 Eagle Tax-Exempt Trust, Michigan, VRDN, Series 94, 3.60% due
6/01/2021 (a) 17,700
17,300 Grand Rapids, Michigan, Water Supply System, Revenue Refunding
Bonds, VRDN, 3.50% due 1/01/2020 (a) (f) 17,300
8,460 Holly, Michigan, School District, VRDN, UT, 3.45% due
5/01/2020 (a) (f) 8,460
100 Kent Hospital Finance Authority, Michigan, Hospital Facilities Revenue
Bonds (Butterworth Hospital), VRDN, Series A, 3.75% due 1/15/2020 (a) 100
4,250 Michigan State Hospital Finance Authority Revenue Bonds (Providence
Hospital--Daughters of Charity Systems, Incorporated), VRDN, 3.40% due
11/01/2014 (a) 4,250
125,500 Michigan State, Notes, CP, UT, 4% due 9/30/1996 126,102
5,000 Michigan State Strategic Fund, Limited Obligation Revenue Refunding
Bonds (Consumers Power Company Project), VRDN, Series A, 3.25% due
6/15/2010 (a) 5,000
1,000 Michigan State Strategic Fund, Solid Waste Disposal Revenue Bonds
(Grayling Generating Project), VRDN, AMT, 3.45% due 1/01/2014 (a) 1,000
8,700 Michigan State Underground Storage Tank, Financial Assurance
Authority Revenue Bonds, VRDN, Series I, 3.30% due 12/01/2004 (a) 8,700
9,500 Monroe County, Michigan, Economic Development Corp., Limited
Obligation Revenue Refunding Bonds (Detroit Edison Co.), VRDN,
Series CC, 3.25% due 10/01/2024 (a) 9,500
University of Michigan, University Hospital Revenue Bonds, VRDN,
Series A (a):
1,400 3.60% due 12/01/2027 1,400
40,500 (Medical Service Plan), 3.60% due 12/01/2027 40,500
9,800 Refunding, 3.60% due 12/01/2019 9,800
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Minnesota-- Eagle Tax-Exempt Trust, Minnesota, VRDN (a):
1.0% $ 13,200 Series 1994-C-5, 3.52% due 2/01/2015 $ 13,200
45,000 Series A, 3.52% due 8/01/2006 45,000
Minnesota State, HFA, S/F Mortgage Revenue Bonds:
5,400 AMT, Series O, 3.60% due 12/12/1996 5,400
16,135 Series M, 3.50% due 12/12/1996 16,135
2,760 Series T, 3.50% due 12/12/1996 2,760
Mississippi-- 10,000 Harrison County, Mississippi, PCR, Refunding (E.I. du Pont de
0.2% Nemours &Co.), VRDN, 3.60% due 9/01/2010 (a) 10,000
3,000 Mississippi Hospital Equipment and Facilities Authority Revenue
Bonds (Mississippi Baptist Medical Center), VRDN, Series B, 3.55%
due 7/01/2012 (a) 3,000
Missouri-- 30,000 Eagle Tax-Exempt Trust, Missouri, VRDN, Series 1993-E, 3.52% due
2.6% 8/01/2006 (a) 30,000
Missouri Higher Education Loan Authority, Student Loan Revenue
Bonds, VRDN, AMT (a):
7,800 Series A, 3.50% due 6/01/2017 7,800
11,700 Series B, 3.50% due 6/01/2020 11,700
16,655 Missouri State Environmental Improvement and Energy Resource
Authority, PCR (Union Electric Co. Project), CP, Series B, 3.25%
due 10/10/1996 16,655
14,500 Missouri State Environmental Improvement and Energy Resource
Authority, Water Pollution Control Revenue Notes (State Revolving
Fund Program), Series A, 3.90% due 9/01/1996 14,506
Missouri State Health and Educational Facilities Authority, Health
Facilities Revenue Bonds (Sisters of Mercy Health System), VRDN (a):
20,000 Refunding, Series B, 3.40% due 12/01/2016 20,000
5,000 Series A, 3.40% due 6/01/2019 5,000
Missouri State Health and Educational Facilities Authority Revenue
Bonds (Washington University Project), VRDN (a):
1,200 Series A, 3.45% due 9/01/2010 1,200
12,230 Series A, 3.50% due 3/01/2017 12,230
18,800 Series B, 3.50% due 3/01/2017 18,800
28,200 Saint Louis County, Missouri, IDA, Hospital Revenue Bonds (DePaul
Hospital--Daughters of Charity), VRDN, 3.40% due 11/01/2014 (a) 28,200
50,000 University of Missouri, Capital Projects Notes, Series FY 1995-1996,
4.75% due 6/28/1996 50,120
<PAGE>
Montana-- 6,900 Billings, Montana, M/F Housing Revenue Bonds (West Park Retirement
0.1% Center), VRDN, 3.40% due 12/01/2007 (a) 6,900
Nebraska-- Nebraska Higher Education Loan Program, Multiple Mode Student
1.0% Loan Revenue Bonds, VRDN (a) (c):
12,800 Series A, 3.35% due 12/01/2015 12,800
13,600 Series B, 3.35% due 12/01/2015 13,600
3,100 Series C, 3.35% due 12/01/2015 3,100
17,600 Series D, 3.35% due 12/01/2015 17,600
Nebraska Higher Education Loan Program, Student Loan Revenue
Bonds, VRDN, AMT (a):
3,550 Series A, 3.45% due 12/01/2016 3,550
30,150 Series C, 3.45% due 8/01/2018 30,150
Nevada-- 111,290 Clark County, Nevada, Airport Improvement Revenue Refunding
1.4% Bonds, VRDN, Series A, 3.30% due 7/01/2012 (a) (c) 111,290
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
New $ 1,400 New Hampshire Higher Educational and Health Facilities
Hampshire-- Authority Revenue Bonds (VHA New England Inc.), VRDN, Series D,
1.1% 3.30% due 12/01/2025 (a) (e) $ 1,400
New Hampshire State, Business Finance Authority, PCR (New England
Power Co. Project), CP:
10,000 AMT, Series A, 3.25% due 5/07/1996 10,000
19,850 Series B, 3.30% due 4/26/1996 19,850
38,400 New Hampshire State Business Finance Authority, PCR, Refunding
(Public Service Co.), VRDN, Series E, 3.45% due 5/01/2021 (a) 38,400
5,700 New Hampshire State, HFA, M/F Revenue Bonds (P.R.A. Properties--
Pheasant Run Project), VRDN, AMT, 3.55% due 5/01/2025 (a) 5,700
12,000 New Hampshire State, IDA, Solid Waste Disposal Revenue Bonds (United
Illuminating Co. Project), AMT, Series A, 3.30% due 9/01/1996 12,000
New Jersey-- 8,000 Jersey City, New Jersey, BAN, GO, UT, 4.75% due 9/27/1996 8,025
0.8% New Jersey State, CP:
20,000 3.25% due 4/08/1996 20,000
25,000 3.25% due 4/09/1996 25,000
8,700 3.30% due 5/07/1996 8,700
<PAGE>
New Mexico-- Farmington, New Mexico, PCR (Arizona Public Service Co.), VRDN (a):
1.1% 5,800 AMT, Series C, 3.60% due 9/01/2024 5,800
49,400 Refunding, Series A, 3.50% due 5/01/2024 49,400
24,850 Refunding, Series B, 3.50% due 9/01/2024 24,850
New Mexico Mortgage Finance Authority, S/F Mortgage Program, AMT (h):
5,500 Series A, 3.25% due 12/31/1996 5,500
4,370 Series B-2, 3.25% due 2/28/1997 4,370
1,380 New Mexico State Hospital Equipment Loan Council, Hospital
Equipment and Improvement Revenue Bonds (Health Facilities), VRDN,
3.40% due 5/01/2009 (a) (c) 1,380
New York-- 7,100 Eagle Tax-Exempt Trust, New York, VRDN, Series 1994-C2, 3.47% due
5.2% 6/15/2018 (a) 7,100
40,000 Nassau County, New York, UT, TAN, Series B, 4.50% due 4/15/1996 40,011
New York City, New York, GO, UT, VRDN (a):
2,980 Series B, Sub-Series B-4, 3.50% due 8/15/2023 (c) 2,980
33,000 Series D, 3.10% due 2/01/2021 33,000
33,000 Series D, 3.10% due 2/01/2022 33,000
3,000 Sub-Series A-7, 3.40% due 8/01/2019 3,000
New York City, New York, RAN:
25,000 Series A, 4.50% due 4/11/1996 25,006
66,400 Series B, 4.75% due 6/28/1996 66,599
6,500 New York State Dormitory Authority Revenue Bonds (Putters-14A),
VRDN, 3.20% due 7/01/2008 (a) 6,500
17,600 New York State, HFA, Revenue Bonds (East 84th Street), VRDN,
AMT, Series A, 3.40% due 11/01/2028 (a) 17,600
New York State Local Government Assistance Corporation Revenue
Bonds, VRDN (a):
21,000 Series B, 3.10% due 4/01/2023 21,000
3,400 Series B, 3.15% due 4/01/2025 3,400
21,200 Series E, 3.15% due 4/01/2025 21,200
17,000 Series G, 3.15% due 4/01/2025 17,000
30,400 New York State Power Authority, Revenue and General Purpose Bonds
(Junior Lien), 3.25% due 9/01/1996 30,400
71,000 Suffolk County, New York, TAN, UT, Series I, 4% due 8/15/1996 71,175
25,800 Triborough Bridge and Tunnel Authority, New York, Special Obligation
Revenue Bonds, VRDN, 3.10% due 1/01/2024 (a) (f) 25,800
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
North Craven County, North Carolina, Industrial Facilities and
Carolina--2.5% Pollution Control Financing Authority Revenue Bonds
(Cravenwood Energy Project),VRDN, AMT (a):
$ 5,400 Series B, 3.60% due 5/01/2011 $ 5,400
3,000 Series C, 3.60% due 5/01/2011 3,000
North Carolina Educational Facilities Finance Agency Revenue
Bonds, VRDN (a):
23,950 (Bowman Grey School of Medicine Project), 3.35% due 9/01/2020 23,950
20,240 (Duke University Project), Series A, 3.25% due 6/01/2027 20,240
15,000 (Duke University Project), Series B, 3.25% due 12/01/2021 15,000
North Carolina Medical Care Commission, Hospital Revenue Bonds (a):
1,700 (Duke University Hospital), VRDN, Series B, 3.25% due 6/01/2015 1,700
2,000 (Duke University Hospital), VRDN, Series C, 3.25% due 6/01/2015 2,000
28,500 (North Carolina Baptist Hospital Project), VRDN, Series B, 3.35%
due 6/01/2022 28,500
34,400 (Pooled Equipment Financing Project), ACES, 3.35% due 12/01/2025 (c) 34,400
8,100 (Pooled Financing Project), ACES, 3.30% due 4/01/2012 8,100
25,110 North Carolina Municipal Power Agency Revenue Bonds (Catawba
Electric No. 1), CP, 3.20% due 5/14/1996 25,110
23,800 Person County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority, Solid Waste Disposal Revenue Bonds
(Carolina Power & Light Company), DATES, AMT, 3.35% due 11/01/2016 (a) 23,800
17,000 Wake County, North Carolina, Industrial Facilities and Pollution
Control Financing Authority Revenue Bonds (Carolina Power & Light
Company Project), DATES, 3.55% due 3/01/2017 (a) 17,000
Ohio-- 10,500 Eagle Tax-Exempt Trust, Ohio, VRDN, 3.47% due 7/01/2015 (a) 10,500
0.3% 1,100 Franklin County, Ohio, Health System Revenue Bonds (Franciscan
Sisters--Saint Anthony Medical Center), VRDN, Series B, 3.35% due
7/01/2015 (a) 1,100
1,865 Ohio HFA, M/F Housing Revenue Bonds (Kenwood Congregate Retirement
Program), VRDN, 3.40% due 12/01/2015 (a) 1,865
3,000 Scioto County, Ohio, Hospital Facilities Revenue Bonds (VHA
Central Inc.Capital Asset), VRDN, Series C, 3.25% due 12/01/2025
(a) (e) 3,000
6,100 Scioto County, Ohio, Marine Terminal Facility, Revenue Refunding
Bonds (Norfolk Southern Corporation Project), VRDN, 3.30% due
8/15/2013 (a) 6,100
<PAGE>
Oklahoma-- 20,000 Garfield County, Oklahoma, Industrial Authority, PCR, Refunding
1.2% (Oklahoma Gas & Electric Project), VRDN, Series A, 3.35% due
1/01/2025 (a) 20,000
24,200 Muskogee, Oklahoma, Industrial Trust, PCR, Refunding (Oklahoma
Gas & Electric Co.), VRDN, Series A, 3.50% due 1/01/2025 (a) 24,200
Oklahoma State Industrial Authority Revenue Bonds (Baptist Medical
Center), VRDN (a):
10,500 Series A, 3.40% due 8/15/2024 10,500
40,500 Series B, 3.40% due 8/15/2023 40,500
Oregon-- 9,100 Medford, Oregon, Hospital Facilities Authority Revenue Bonds
2.1% (Gross--Rogue Valley Health Services), VRDN, 3.65% due 10/01/2016
(a) 9,100
7,840 Oregon State, GO, Elderly and Disabled Housing, UT, AMT, Series C,
3.65% due 12/19/1996 7,840
Oregon State, GO, Veterans' Welfare Bonds, VRDN (a):
53,000 Series 73-E, 3.25% due 12/01/2016 53,000
15,000 Series 73-G, 3.20% due 12/01/2018 15,000
64,300 Series 73-H, 3.20% 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, 3.65% due 12/01/2027 (a) 8,000
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Pennsyl- $ 27,000 Allegheny County, Pennsylvania, IDA, PCR (Duquesne Light Project),
vania--6.7% CP, Series A, 3.50% due 6/06/1996 $ 27,000
2,500 Butler County, Pennsylvania, IDA, IDR, Refunding (Wetterau Finance
Co. Project), VRDN, 3.45% due 12/01/2014 (a) 2,500
3,000 Delaware County, Pennsylvania, IDA, Solid Waste Revenue Bonds
(Scott Paper Company), VRDN, Series B, 3.80% due 12/01/2018 (a) 3,000
17,000 Eagle Tax-Exempt Trust, Pennsylvania, VRDN, Series 94, Class 3803,
3.52% due 5/01/2008 (a) 17,000
3,200 Geisinger Authority, Pennsylvania, Health Systems Revenue Bonds,
Series B, VRDN, 3.40% due 7/01/2022 (a) 3,200
5,600 Montgomery County, Pennsylvania, Higher Education and Health
Authority, Hospital Revenue Bonds (Holy Redeemer Hospital), VRDN,
3.30% due 9/01/2018 (a) (e) 5,600
Pennsylvania State Higher Education Assistance Agency, Student Loan
Revenue Bonds, VRDN (a):
26,700 AMT, Series A, 3.50% due 1/01/2018 26,700
84,950 AMT, Series A, 3.50% due 12/01/2024 84,950
27,000 AMT, Series A, 3.50% due 12/01/2025 27,000
60,000 AMT, Series B, 3.50% due 7/01/2018 60,000
34,900 Series C, 3.50% due 7/01/2018 34,900
30,800 Series E, 3.50% due 7/01/2018 30,800
Pennsylvania State Higher Educational Facilities Authority, College
and University Revenue Refunding Bonds (Carnegie Mellon University),
VRDN (a):
9,600 Series C, 3.50% due 11/01/2029 9,600
3,400 Series D, 3.50% due 11/01/2030 3,400
Pennsylvania State Higher Educational Facilities Authority, Health
Services Revenue Bonds (a):
5,225 (Putters), VRDN, Series 4B, 3.60% due 1/01/2009 5,225
15,000 (University of Pennsylvania), ACES, Series B, 3.25% due 1/01/2024 15,000
5,000 Pennsylvania State Higher Educational Facilities Authority, Revenue
Refunding Bonds (Thomas Jefferson University), ACES, Series C, 3.45%
due 8/26/1996 5,000
143,400 Pennsylvania State, TAN, First Series, 4.50% due 6/28/1996 143,771
13,000 Pennsylvania State, Tender Option, VRDN, 3.52% due 5/01/2015 (a) 13,000
10,200 Philadelphia, Pennsylvania, IDA, Revenue Bonds (30th Street Station
Project), VRDN, AMT, 3.55% due 1/01/2011 (a) (c) 10,200
20,880 Sayre, Pennsylvania, Health Care Facilities Authority Revenue Bonds
(VHA of Pennsylvania, Inc., Capital Assets Financing Program), VRDN,
Series L, 3.25% due 12/01/2020 (a) (e) 20,880
South 2,000 Berkeley County, South Carolina, PCR, Refunding (Amoco Chemical Co.
Carolina--0.8% Project), VRDN, 3.45% due 7/01/2012 (a) 2,000
6,500 Charleston County, South Carolina, Industrial Revenue Refunding Bonds
(Massey Coal Terminal), VRDN, 3.50% due 1/01/2007 (a) 6,500
24,400 Orangeburg County, South Carolina, Solid Waste Disposal Facilities
Revenue Bonds (South Carolina Electric & Gas), VRDN, AMT, 3.65% due
11/01/2024 (a) 24,400
South Carolina Jobs EDA, Revenue Bonds, VRDN (a):
7,200 AMT (Greenfield Industries Inc. Project), 3.55% due 3/01/2015 7,200
5,400 AMT (Wellman, Inc. Project), 3.45% due 12/01/2010 5,400
14,100 AMT (Wellman, Inc. Project), 3.45% due 12/01/2012 14,100
4,600 (Saint Francis Hospital Project), 3.35% due 7/01/2022 4,600
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Tennessee-- $ 16,000 Clarksville, Tennessee, Public Building Authority Revenue Bonds
0.9% (Pooled Financing--Tennessee Municipal Bond Fund), VRDN, 3.50%
due 10/01/2025 (a) $ 16,000
9,400 Cleveland, Tennessee, IDB, Revenue Bonds (Newly Wed Foods
Incorporated Project), VRDN, AMT, 3.55% due 1/01/2012 (a) 9,400
8,100 Loudon, Tennessee, IDB, PCR, Refunding (A.E. Staley Manufacturing
Co. Project), VRDN, 3.45% due 9/01/2001 (a) 8,100
Memphis, Tennessee (Putters), UT, AMT:
6,695 Series 3-A, 3.60% due 5/10/1996 6,695
3,680 Series 3-B, 3.60% due 5/10/1996 3,680
14,955 Morristown, Tennessee, IDB, PCR, Refunding (Akzo Chemicals, Inc.
Project), VRDN, 3.45% due 8/01/2001 (a) 14,955
12,000 Volunteer State Student Funding Corporation, Tennessee, Student Loan
Revenue Bonds, VRDN, AMT, Series A-1, 3.40% due 12/01/2017 (a) 12,000
Texas-- Brazos River Authority, Texas, PCR (Texas Utilities Electric Co.),
13.7% VRDN, AMT (a):
29,055 Refunding, Series B, 3.35% due 6/01/2030 29,055
8,600 Refunding, Series C, 3.60% due 6/01/2030 8,600
8,000 Series A, 3.60% due 4/01/2030 8,000
24,700 Brazos, Texas, Higher Education Authority Incorporated, Student Loan
Revenue Bonds, VRDN, AMT, Series B-1, 3.40% due 6/01/2023 (a) 24,700
4,000 Corpus Christi, Texas, IDR (Dedietrich USA Incorporated Project),
VRDN, AMT, 3.60% due 11/01/2008 (a) 4,000
10,000 Dallas-Fort Worth, Texas, Regional Airport Revenue Bonds, Tender
Option, VRDN, 3.50% due 11/01/2005 (a) 10,000
10,700 Grapevine, Texas, IDR, Airport Revenue Refunding Bonds (Southern Air
Transportation Project), VRDN, 3.40% due 3/01/2010 (a) 10,700
15,000 Greater Texas Student Loan Corp., Student Loan Revenue Refunding
Bonds, Series A, AMT, 3.35% due 3/01/1997 15,000
4,565 Gulf Coast, Texas, IDA, Marine Terminal Revenue Bonds (Amoco Oil
Co. Project), 3.55% due 6/01/1996 4,565
Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds
(Citgo Petroleum Corp. Project), VRDN, AMT (a):
13,700 3.65% due 5/01/2025 13,700
15,400 3.65% due 4/01/2026 15,400
7,000 Gulf Coast Waste Disposal Authority, Texas, Environmental Improvement
Revenue Bonds (Amoco Oil Co. Project), 3.25% due 9/01/1996 7,000
Gulf Coast Waste Disposal Authority, Texas, PCR (Amoco Oil Co.
Project), VRDN, AMT (a):
22,500 3.60% due 5/01/2023 22,500
17,500 3.60% due 6/01/2024 17,500
14,300 Gulf Coast Waste Disposal Authority, Texas, Solid Waste Disposal
Revenue Refunding Bonds (Amoco Oil Co. Project), VRDN, AMT, 3.60%
due 8/01/2023 (a) 14,300
17,710 Harris County, Texas, GO, VRDN, 3.45% due 8/15/2016 (a) (f) 17,710
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds, VRDN (a):
154,500 (Methodist Hospital), 3.50% due 12/01/2025 154,500
23,600 (Saint Luke's Episcopal Hospital), Series B, 3.50% due 2/15/2016 23,600
23,400 (Saint Luke's Episcopal Hospital), Series C, 3.50% due 2/15/2016 23,400
8,500 (Saint Luke's Episcopal Hospital), Series D, 3.50% due 2/15/2016 8,500
7,100 Harris County, Texas, Industrial Development Corporation, PCR (Exxon
Project), DATES, Series 1984-A, 3.50% 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, 3.65% due 2/01/2023 (a) 46,100
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Texas Harris County, Texas, Toll Road Revenue Bonds, VRDN (a):
(concluded) $ 25,000 Sub-Lien H, 3.30% due 8/01/2020 $ 25,000
15,000 UT, Sub-Lien D, 3.25% due 8/01/2015 15,000
Hockley County, Texas, Industrial Development Corporation, PCR:
13,940 (Amoco Project), 3.75% due 5/01/1996 13,940
31,360 (Amoco Project--Standard Oil Co.), 3.30% due 9/01/1996 31,373
11,000 Houston, Texas, Water and Sewer System Revenue Bonds, VRDN, 3.60%
due 12/01/2020 (a) 11,000
9,400 Lower Neches Valley Authority, Texas, PCR (Chevron U.S.A. Inc.
Project), 3.10% due 8/16/1996 9,395
22,200 Lubbock, Texas, Health Facilities Development Corporation Revenue
Bonds (Saint Joseph Health System), VRDN, Series A, 3.50% due
7/01/2013 (a) 22,200
North Texas Higher Education Authority Incorporated, Student Loan
Revenue Bonds, VRDN, AMT (a) (e):
12,800 Series C, 3.50% due 4/01/2020 12,800
13,700 Series F, 3.50% due 4/01/2020 13,700
North Texas Higher Education Authority Incorporated, Student Loan
Revenue Refunding Bonds, VRDN, AMT (a):
3,000 3.50% due 3/01/1999 3,000
27,900 3.50% due 3/01/2005 27,900
29,000 Series A, 3.50% due 4/01/2005 29,000
5,000 Series A, 3.50% due 4/01/2020 5,000
Panhandle Plains, Texas, Higher Education Authority Incorporated,
Student Loan Revenue Bonds, VRDN, AMT, Series A (a):
29,000 3.40% due 6/01/2021 29,000
4,700 Refunding, 3.40% due 6/01/2008 4,700
18,800 Port Corpus Christi, Texas, Industrial Development Corporation,
Sewage and Solid Waste Disposal Revenue Bonds (Citgo Petroleum Corp.
Project), VRDN, 3.90% due 4/01/2026 (a) 18,800
17,600 San Antonio, Texas, Higher Education Authority, Revenue Refunding Bonds
(Trinity University Project), VRDN, 3.45% due 4/01/2004 (a) 17,600
12,400 Southwest Texas, Higher Education Authority Incorporated, Revenue
Refunding Bonds (Southern Methodist University), VRDN, 3.45% due
7/01/2015 (a) 12,400
20,000 Texas State, CP, 3.35% due 8/15/1996 19,999
Texas State, GO, Refunding, AMT:
29,500 (Veterans' Housing Assistance Fund-I), VRDN, 3.30% due 12/01/2016 (a) 29,500
10,000 (Veterans' Housing Assistance Fund-II), CP, Series D, 3.85%
due 7/17/1996 10,000
28,400 Texas State, Multi-Modal Water Development Board, VRDN, Series A,
3.60% due 3/01/2015 (a) 28,400
Texas State, Public Financing Authority Revenue Bonds, CP:
32,800 3.20% due 4/02/1996 32,800
35,000 Series A, 3.25% due 8/01/1996 35,000
109,400 Texas State, TRAN, Series A, 4.75% due 8/30/1996 110,055
27,430 Travis County, Texas, Health Facility Development Corporation
Revenue Bonds (Daughters of Charity--Seton Medical Center), VRDN, 3.40%
due 11/01/2013 (a) 27,430
Waco, Texas, Health Facilities Development Corporation, Health
Facilities Revenue Bonds (Daughters of Charity--Providence Hospital),
VRDN (a):
18,160 3.40% due 11/01/2013 18,160
12,100 Series 88A, 3.40% due 11/01/2018 12,100
9,100 West Side Calhoun County, Texas, Development Corporation, PCR (Sohio
Chemical Company Project), UPDATES, 3.50% due 12/01/2015 (a) 9,100
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Utah--0.8% Salt Lake County, Utah, PCR, Refunding (Service Station Holdings
Project), VRDN (a):
$ 6,400 3.50% due 2/01/2008 $ 6,400
15,100 Series B, 3.50% due 8/01/2007 15,100
5,900 Utah County, Utah, Environmental Improvement Revenue Refunding Bonds
(USX Corp. Project), 3.70% due 5/01/1996 5,900
Utah State Board of Regents, Student Loan Revenue Bonds, VRDN, AMT
(a) (e):
6,000 Series C, 3.50% due 11/01/2013 6,000
33,500 Series L, 3.50% due 11/01/2025 33,500
Vermont-- 1,100 Vermont Higher Educational and Health Buildings, Financing Agency
0.4% Revenue Bonds (VHA--New England), VRDN, Series G, 3.30% due
12/01/2025 (a) (e) 1,100
30,675 Vermont State Student Assistance Corporation, Student Loan Revenue
Bonds, VRDN, 3.40% due 1/01/2004 (a) 30,675
Virginia-- 8,500 Eagle Tax-Exempt Trust, Virginia, VRDN, Series 95, Class 7091, 3.47%
1.2% due 1/15/2013 (a) 8,500
5,700 Loudoun County, Virginia, IDA, Residential Care Facility Revenue Bonds
(Falcons Landing Project), VRDN, Series B, 3.45% due 11/01/2024 (a) 5,700
Rockingham County, Virginia, IDA, Revenue Bonds, VRDN (a):
1,000 3.80% due 10/01/2022 1,000
16,000 (Merck & Co. Project), Series A, 3.55% due 10/01/2020 16,000
Virginia State, HDA, Commonwealth Mortgage Revenue Bonds:
8,985 AMT, Series E, Sub-Series E, 3.48% due 7/01/1996 8,985
58,975 Series F, Sub-Series F, 3.42% due 7/01/1996 58,975
Washington-- 20,000 King County, Washington, CP, 3.30% due 5/09/1996 20,000
1.6% 10,200 Snohomish County, Washington, Public Utility District No. 001,
Electric Revenue Bonds (Generation System), VRDN, 3.30% due
1/01/2025 (a) (c) 10,200
17,200 Washington State, GO, Tender Option, VRDN, 3.40% due 10/01/2015 (a) 17,200
10,600 Washington State Housing Finance Commission, M/F Mortgage Revenue
Bonds (Courtside Apartments Project), VRDN, AMT, 3.65% due 1/01/2026 (a) 10,600
5,785 Washington State Housing Finance Commission, S/F Program Project
Bonds, AMT, Series 1-A, 4.10% due 6/01/1996 (f) 5,785
Washington State Public Power Supply System, Revenue Refunding Bonds
(Nuclear Project No. 3), VRDN (a):
23,970 Series 3A-1, 3.35% due 7/01/2018 23,970
9,100 Series 3A-2, 3.35% due 7/01/2018 9,100
Washington Student Loan Finance Association Revenue Bonds (Guaranteed
Student Loan Program), VRDN (a):
10,700 AMT, Series A, 3.45% due 12/01/2002 10,700
6,000 AMT, Series B, 3.45% due 12/01/2002 6,000
10,680 AMT, Series B, 3.40% due 1/01/2004 10,680
10,400 Second Series, 3.55% due 1/01/2001 10,400
West Virginia-- 9,500 Grant County, West Virginia, County Commission, IDR (Vepco
0.3% International), CP, 3.30% due 5/08/1996 9,500
11,220 Hancock County, West Virginia, County Commission, IDR, Refunding
(The Boc Group Inc. Project), VRDN, 3.45% due 8/01/2005 (a) 11,220
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1996 (CONCLUDED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Wisconsin-- Eagle Tax-Exempt Trust, Wisconsin, VRDN (a):
1.7% $ 6,400 Series 94, Class 4901, 3.52% due 9/01/2015 $ 6,400
24,300 Series 94, Class 4905, 3.52% due 10/01/2005 24,300
30,000 Milwaukee, Wisconsin, RAN, Series A, 3.50% due 2/27/1997 30,133
19,000 Pleasant Prairie, Wisconsin, PCR, Refunding (Wisconsin Electric &
Power Co.), VRDN, Series C, 3.40% due 9/01/2030 (a) 19,000
16,000 Sheboygan, Wisconsin, PCR, Refunding (Wisconsin Power and Light
Company Project), VRDN, Series A, 3.40% due 9/01/2015 (a) 16,000
15,645 Stoughton Wisconsin Area School District, BAN, 3.75% due 12/02/1996 15,656
23,800 Wisconsin State, GO, 4.50% due 6/17/1996 23,850
2,200 Wisconsin State Health Facilities Authority Revenue Bonds
(Saint Mary's Hospital of Milwaukee--Daughters of Charity), VRDN,
3.40% due 11/01/2016 (a) 2,200
Wyoming-- 18,000 Lincoln County, Wyoming, Environmental Improvement Revenue Bonds
0.8% (Pacificorp. Project), VRDN, AMT, 3.70% due 11/01/2025 (a) 18,000
5,500 Lincoln County, Wyoming, PCR (Exxon Project), VRDN, AMT, Series A,
3.60% due 7/01/2017 (a) 5,500
11,100 Sweetwater County, Wyoming, Environmental Improvement Revenue
Refunding Bonds (Pacificorp Project), VRDN, AMT, 3.70% due 11/01/2025 (a) 11,100
18,000 Sweetwater County, Wyoming, PCR, Refunding (Pacificorp Project), VRDN,
3.40% due 7/01/2015 (a) 18,000
12,400 Uinta County, Wyoming, PCR (Amoco Oil Company Project), Series A,
3.98% due 12/01/1996 12,418
Total Investments (Cost--$8,068,245*)--98.8% 8,068,245
Other Assets Less Liabilities--1.2% 95,915
----------
Net Assets--100.0% $8,164,160
==========
<PAGE>
<FN>
(a)The interest rate is subject to change periodically based on
certain indexes. The interest rate shown is the rate in effect at
March 31, 1996.
(b)Prerefunded; to be called.
(c)MBIA Insured.
(d)FHA Insured. (e)AMBAC Insured.
(f)FGIC Insured.
(g)FSA Insured.
(h)GNMA/FNMA Collateralized.
*Cost for Federal income tax purposes was $8,068,251 (in thousands).
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 31, 1996
<S> <C> <C>
Assets:
Investments, at value (identified cost--$8,068,245,060) (Note 1a) $ 8,068,245,060
Cash 172,297
Receivables:
Securities sold $ 63,320,957
Interest receivable 63,304,278 126,625,235
---------------
Prepaid registration fees and other assets (Note 1d) 344,699
---------------
Total assets 8,195,387,291
---------------
Liabilities:
Payables:
Securities purchased 25,116,316
Distributor (Note 2) 2,609,783
Investment adviser (Note 2) 2,547,272 30,273,371
---------------
Accrued expenses and other liabilities 954,142
---------------
Total liabilities 31,227,513
---------------
Net Assets $ 8,164,159,778
===============
Net Assets Consist of:
Shares of beneficial interest, $0.10 par value, unlimited number of shares
authorized $ 816,887,303
Paid-in capital in excess of par 7,351,949,382
Undistributed investment income--net 1,500
Accumulated realized capital losses--net (Note 4) (4,678,407)
---------------
Net Assets--Equivalent to $1.00 per share based on 8,168,873,032 shares of
beneficial interest outstanding $ 8,164,159,778
===============
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1996
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 296,097,964
Expenses:
Investment advisory fees (Note 2) $ 29,964,050
Distribution fees (Note 2) 9,683,869
Transfer agent fees (Note 2) 1,595,507
Registration fees (Note 1d) 544,985
Accounting services (Note 2) 515,024
Custodian fees 211,438
Printing and shareholder reports 130,650
Professional fees 83,715
Pricing fees 53,407
Trustees' fees and expenses 47,426
Other 235,435
---------------
Total expenses 43,065,506
---------------
Investment income--net 253,032,458
Realized Gain on Investments--Net (Note 1c) 722,425
---------------
Net Increase in Net Assets Resulting from Operations $ 253,754,883
===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended
March 31,
Increase (Decrease) in Net Assets: 1996 1995
<S> <C> <C>
Operations:
Investment income--net $ 253,032,458 $ 204,460,186
Realized gain (loss) on investments--net 722,425 (1,362,814)
--------------- ---------------
Net increase in net assets resulting from operations 253,754,883 203,097,372
--------------- ---------------
<PAGE>
Dividends to Shareholders (Note 1e):
Investment income-- net (252,865,367) (204,366,652)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (252,865,367) (204,366,652)
--------------- ---------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 25,775,869,013 23,571,897,187
Net asset value of shares issued to shareholders in reinvestment of
dividends (Note 1e) 252,865,978 204,370,799
--------------- ---------------
26,028,734,991 23,776,267,986
Cost of shares redeemed (25,257,428,388) (24,294,994,658)
--------------- ---------------
Net increase (decrease) in net assets derived from beneficial interest
transactions 771,306,603 (518,726,672)
--------------- ---------------
Net Assets:
Total increase (decrease) in net assets 772,196,119 (519,995,952)
Beginning of year 7,391,963,659 7,911,959,611
--------------- ---------------
End of year* $ 8,164,159,778 $ 7,391,963,659
=============== ===============
<FN>
*Undistributed investment income-- net (Note 1f) $ 1,500 $ 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 Year Ended March 31,
Increase (Decrease) in Net Asset Value: 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Investment income--net .03 .03 .02 .02 .04
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.03) (.03) (.02) (.02) (.04)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment Return 3.32% 2.76% 1.96% 2.36% 3.76%
========== ========== ========== ========== ==========
<PAGE>
Ratios to Average Net Assets:
Expenses .55% .55% .55% .54% .54%
========== ========== ========== ========== ==========
Investment income--net 3.26% 2.70% 1.94% 2.33% 3.70%
========== ========== ========== ========== ==========
Supplemental Data:
Net assets, end of year (in thousands) $8,164,160 $7,391,964 $7,911,960 $7,527,054 $7,874,437
========== ========== ========== ========== ==========
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. 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.
<PAGE>
(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.
(f) Reclassification--Generally accepted accounting principles
require that certain components of net assets be reclassified to
reflect permanent differences between financial reporting and tax
purposes. Accordingly, current year's permanent book/tax differences
of $36,347 and $223,380 have been reclassified from paid-in capital
in excess of par and undistributed net investment income,
respectively, to accumulated net realized capital losses. These
reclassifications have no effect on net assets or net asset value
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. 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 of average daily net assets, 2.0% of the next $70
million of average daily net assets, and 1.5% of the average daily
net assets in excess thereof. No fee payment will be made to the
Adviser during any year which will cause such expenses to exceed the
pro rata expense limitation at the time of such payment.
<PAGE>
CMA TAX-EXEMPT FUND
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
Pursuant to the Distribution and Shareholder Servicing Plan in
compliance with Rule 12b-1 under the Investment Company Act of 1940,
Merrill Lynch, Pierce, Fenner & Smith Inc. ("MLPF&S") receives a
distribution fee from the Fund at the end of each month at the
annual rate of 0.125% of the average daily net assets of the Fund.
The distribution fee is to compensate MLPF&S financial consultants
and other directly involved branch office personnel for selling
shares of the Fund and for providing direct personal services to
shareholders. The distribution fee is not compensation for the
administrative and operational services rendered to the Fund by
MLPF&S in processing share orders and administering shareholder
accounts.
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.
<AUDIT-REPORT>
CMA TAX-EXEMPT FUND
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
CMA Tax-Exempt Fund:
<PAGE>
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of CMA Tax-
Exempt Fund as of March 31, 1996, the related statements of
operations for the year then ended and changes in net assets for
each of the years in the two-year period then ended, and the
financial highlights for each of the years in the five-year period
then ended. These financial statements and the financial highlights
are the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements and the financial highlights are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned at March
31, 1996 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights
present fairly, in all material respects, the financial position of
CMA Tax-Exempt Fund as of March 31, 1996, the results of its
operations, the changes in its net assets, and the financial
highlights for the respective stated years in conformity with
generally accepted accounting principles.
Deloitte & Touche LLP
Princeton, New Jersey
May 15, 1996
</AUDIT-REPORT>
IMPORTANT TAX INFORMATION (UNAUDITED)
All of the net investment income distributions paid daily by CMA Tax-
Exempt Fund during its taxable year ended March 31, 1996 qualify as
tax-exempt interest dividends for Federal income tax purposes.
Additionally, there were no capital gains distributed by the Fund
during the year.
Please retain this information for your records.
<PAGE>
