CMA Tax-Exempt Fund
Annual Report
March 31, 1997
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
Printed on post-consumer recycled paper
TO OUR SHAREHOLDERS:
For the year ended March 31, 1997, CMA Tax-Exempt Fund paid
shareholders a net annualized yield of 2.99%*. As of March 31, 1997,
the Fund's 7-day yield was 2.96%.
Economic Environment and
Investment Strategy
Short-term interest rates finished higher for the six-month period
ended March 31, 1997, although they experienced considerable
volatility during that time. Investors were continually trying to
gauge economic strength from conflicting data, while at the same
time reacting to contradictory statements by the Federal Reserve
Board over the direction of monetary policy. Federal Reserve Board
Chairman Alan Greenspan's concerns over "irrational exuberance" in
the stock market seemed to maintain a bias for tightening of
monetary policy.
<PAGE>
However, favorable inflationary data in November 1996 and December
1996 forced interest rates lower, although stronger-than-expected
economic data pushed interest rates higher in January 1997. For
example, interest rates on one-year Treasury bills, which began the
six-month period at 5.69%, fell as low as 5.36% in mid-December
1996, only to rise again to 5.62% by the end of January 1997.
Furthermore, yields declined approximately 20 basis points (0.20%)
in February 1997, only to rise to their highest level of the period
by March 31, 1997 and close at 6.01%. This late rise was reflective
of the fact that the Federal Reserve Board finally did raise the
Federal Funds rate by 25 basis points to 5.50% at its March 25, 1997
Federal Open Market Committee meeting. The interest rate hike, the
first in over two years, was intended by the Federal Reserve Board
to hinder any inflationary pressures that may be building as a
result of the tight labor markets.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
Interest rates on short-term tax-exempt securities also experienced
considerable volatility for the six-month period ended March 31,
1997 driven primarily by supply and demand. Yields on variable rate
demand notes (VRDNs) rose dramatically by the end of December 1996,
as dealers sought to avoid the high cost of financing inventory that
occurs at year-end when the cost to borrow money is expensive. In
addition, yields for longer-dated notes declined dramatically in
November 1996 and December 1996 as investors prepared for the
traditional inflows of cash in January 1997. In fact, for a brief
time period the yield curve for short-term tax-exempt issues assumed
an inverted shape. However, with the start of 1997 VRDN rates fell
to reflect more normal carrying costs by dealers, and the yield
curve once again assumed its positive slope. However, investors were
slightly surprised as the impact of the traditional seasonal January
inflows remained subdued and forced the various remarketing agents
to keep yield levels on VRDNs relatively high to attract crossover
buyers from the taxable markets in order to maintain low inventory
levels. Although demand remained somewhat strong in February 1997
and March 1997, there was enough demand to satisfy this and keep
interest rates slightly stable through the remainder of the period.
<PAGE>
Interest rates on six-month municipal notes, which fell as much as
60 basis points by the end of December 1996, rose once again to
finish the period approximately 20 basis points higher than on
October 1, 1996. New-issue supply for the period was approximately
$17 billion, a 16.5% increase from the $14.6 billion which was
issued for the same six-month period ended March 31, 1996. In
addition, assets of the tax-exempt money fund industry rose
approximately $15.9 billion, to end the period at approximately
$148.2 billion.
During the fiscal year ended March 31, 1997, the average portfolio
maturity of CMA Tax-Exempt Fund fluctuated in a fairly narrow range
of 25 days--55 days and was relatively neutral in nature. This
decision was prompted both by the relative flatness of the short-
term tax-exempt yield curve, which made extension trades
unattractive, and by the uncertainty surrounding Federal Reserve
Board policy. We extended the portfolio's average maturity during
certain periods of perceived supply and demand imbalance to take
advantage of higher yields, then reduced average portfolio maturity
by selling securities when the market became overbought. This
occurred mainly from September 1996--December 1996, when the average
portfolio maturity was extended to the high 50-day range and then
reduced back to the 40-day range by mid-December 1996 as the Fund
sold securities in order to lock in profits. This strategy benefited
the Fund over the last twelve months, allowing it to take advantage
of the flatter yield curve and trading opportunities when they
occurred, both of which enhanced performance over the period.
We expect to maintain this neutral portfolio strategy in the
upcoming months as we await new issuance, a clearer view of economic
growth and news on the possible repeal of the 2% de minimus
threshold for corporations which could adversely affect, albeit
minimally, the short-term tax-exempt market. The 2% de minimus
repeal is part of the Federal budget agreement being negotiated and
refers to the amount of interest expense which could be disallowed
by corporations that have debt outstanding and hold municipal bonds
as part of their investment portfolio. In addition, proposed
amendments to SEC Rule 2a-7 are expected to be adopted in the spring
of 1997. We continue to look for opportunities to diversify the
portfolio while maintaining credit quality and offering shareholders
an attractive tax-exempt money market yield.
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
May 8, 1997
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
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 MARCH 31, 1997 (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.),
2.2% VRDN, 3.80% due 12/01/2026 (a) $ 28,000
Columbia, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project),
VRDN (a):
21,200 Series A, 3.60% due 5/01/2022 21,200
8,200 Series C, 3.70% due 10/01/2022 8,200
9,000 Series E, 3.75% due 10/01/2022 9,000
9,800 Decatur, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Amoco
Chemical Co. Project), VRDN, AMT, 3.75% due 5/01/2025 (a) 9,800
7,600 McIntosh, Alabama, IDB, PCR (Ciba-Geigy Corporation Project), VRDN,
Series A, 3.45% due 12/01/2003 (a) 7,600
37,900 McIntosh, Alabama, IDB, Solid Waste Disposal Revenue Bonds (Ciba-Geigy
Corporation Project), VRDN, AMT, 3.45% due 7/01/2004 (a) 37,900
9,170 Mobile, Alabama, IDB, PCR (International Paper Company Project),
Series A, 3.85% due 11/15/1997 9,167
11,600 Mobile, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project), VRDN,
3.60% due 6/01/2015 (a) 11,600
9,905 Montgomery, Alabama, Special Care Facilities Financing Authority, Health
Care Facilities Revenue Bonds (Saint Margaret's Hospital--Daughters
of Charity), VRDN, 3.45% due 11/01/2013 (a) 9,905
15,000 Parrish, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project), VRDN,
3.60% due 6/01/2015 (a) 15,000
15,000 Stevenson, Alabama, IDB, Environmental Improvement Revenue Bonds (Mead
Corporation Project), VRDN, 3.75% due 1/01/2031 (a) 15,000
Alaska--1.4% 10,400 Alaska Industrial Development and Export Authority Revolving Fund, VRDN,
AMT, Series B, 3.50% due 4/01/2023 (a) 10,400
Valdez, Alaska, Marine Terminal Revenue Refunding Bonds (Exxon Pipeline
Co. Project), VRDN (a):
20,000 Series A, 3.70% due 12/01/2033 20,000
60,000 Series B, 3.70% due 12/01/2033 60,000
29,000 Series C, 3.70% due 12/01/2033 29,000
Arizona-- 10,200 Arizona Educational Loan Marketing Corporation Revenue Bonds, VRDN,
2.3% AMT, Series A, 3.55% 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, 3.75% due
12/01/2008 (a) (c) 4,300
21,500 Maricopa County, Arizona, PCR (El Paso Electric Co. Project), VRDN,
Series A, 3.60% due 7/01/2014 (a) 21,500
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (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):
$ 38,800 Series A, 3.75% due 5/01/2029 $ 38,800
29,700 Series C, 3.60% due 5/01/2029 29,700
19,700 Series D, 3.65% due 5/01/2029 19,700
15,500 Series F, 3.70% due 5/01/2029 15,500
2,300 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont Mining Corp.),
VRDN, 3.65% due 12/01/2009 (a) 2,300
Salt River Project, Arizona, Agricultural Improvement and Power
District, Electric System Revenue Promissory Notes, CP:
36,600 3.60% due 8/19/1997 36,600
14,685 3.60% due 8/21/1997 14,685
Arkansas-- 19,000 Little River County, Arkansas, Solid Waste Disposal Revenue Bonds (Nekoosa
0.2% Papers Incorporated Project), VRDN, AMT, 3.55% due 2/01/2025 (a) 19,000
California-- 49,900 California Higher Education Loan Authority, Inc., Student Loan Revenue
4.0% Bonds, AMT, Series C, 3.75% due 6/01/1997 (b) 49,899
California Higher Education Loan Authority, Inc., Student Loan Revenue
Refunding Bonds:
10,000 AMT, Series A, 3.75% due 6/01/1997 10,000
10,000 Senior Lien, Series A-1, 3.95% due 7/01/1997 (b) 10,000
10,000 Senior Lien, Series A-2, 3.70% due 5/01/1997 (b) 10,000
20,425 Series A, 3.70% due 5/01/1997 20,425
33,000 VRDN, AMT, Series E-1, 3.50% due 12/01/2022 (a) (b) 33,000
50,000 California Public Capital Improvements Financing Authority Revenue Bonds
(Pooled Loan Project), Series D, 3.55% due 6/15/1997 50,000
31,400 California State, CP (Morgan Guaranty Trust Co. of NY), 3.40% due 4/09/1997 31,400
California State, RAN:
31,000 Series A, 4.50% due 6/30/1997 31,074
10,000 Series C-1, 3.30% due 6/30/1997 10,000
17,600 Eastern Municipal Water District, California, Water and Sewer Revenue
Refunding Bonds, VRDN, COP, Series B, 3.20% 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 3,506
40,000 Los Angeles County, California, Metropolitan Transportation Authority
Revenue Bonds, VRDN, 3.40% due 7/01/2025 (a) (h) 40,000
11,800 San Diego, California, COP, Pooled TRAN, Area Local Government, 4.75%
due 10/01/1997 (h) 11,861
7,500 Southern California Public Power Authority, Revenue Refunding Bonds
(Southern Transmission Project), VRDN, 3.20% due 7/01/2019 (a) (e) 7,500
<PAGE>
Colorado-- Colorado Health Facilities Authority Revenue Bonds, VRDN (a):
1.1% 6,700 (North Colorado Medical Center), 3.45% due 5/15/2020 (c) 6,700
10,700 (Sisters of Charity Health Services), 3.45% due 5/15/2025 10,700
12,000 (Sisters of Charity Health Services), Series C, 3.45% due 5/15/2022 12,000
10,500 Denver, Colorado, City and County Airport Revenue Bonds, VRDN, AMT,
Series F, 3.60% due 11/15/2025 (a) 10,500
14,755 Palomino Park, Colorado, Assessment Lien Revenue Bonds (Public Improvements
Corporation), VRDN, 3.65% due 12/01/2035 (a) 14,755
Pitkin County, Colorado, IDR, Refunding (Aspen Skiing Co. Project), VRDN (a):
6,500 AMT, Series B, 3.80% due 4/01/2014 6,500
2,700 Series A, 3.70% due 4/01/2016 2,700
17,850 Platte River Power Authority, Colorado, Power Revenue Refunding Bonds,
Series AA, 6.875% due 6/01/1997 (g) 18,298
8,000 Westminster, Colorado, IDR, Refunding (Ball Corp. Project), VRDN, 3.55%
due 6/01/2005 (a) 8,000
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Connecticut-- Connecticut State, HFA, Housing Mortgage Finance Program:
1.0% $ 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, 3.40% 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
Eagle Tax Exempt Trust, VRDN (a):
23,700 3.61% due 11/15/2004 23,700
13,200 3.56% due 8/15/2012 13,200
Delaware-- 15,000 Delaware State, EDA, IDR (Delaware City Waste Recovery), VRDN, AMT,
0.3% Series B, 3.60% due 12/01/2028 (a) 15,000
Delaware State, EDA, Revenue Bonds (Delmarva Power & Light Co. Project),
VRDN, AMT (a):
4,400 3.85% due 10/01/2017 4,400
2,100 Series A, 3.85% due 10/01/2017 2,100
<PAGE>
District of 10,300 District of Columbia, General Fund Recovery Bonds, VRDN, UT, Series B-3,
Columbia-- 3.85% due 6/01/2003 (a) 10,300
0.8% 17,400 District of Columbia, Hospital Revenue Bonds (Providence
Hospital--Daughters of Charity), VRDN, Series 89-A, 3.45% due 12/01/2019 (a) 17,400
11,100 District of Columbia, Revenue Bonds (George Washington University),
VRDN, Series A, 3.60% due 3/01/2006 (a) 11,100
26,700 Eagle Tax Exempt Trust, VRDN, Series 1994-A, 3.61% due 6/01/2005 (a) 26,700
Florida-- 3,400 Broward County, Florida, HFA, M/F Housing Revenue Bonds (Margate
2.3% Investments Projects), VRDN, 3.55% due 11/01/2005 (a) 3,400
34,710 Dade County, Florida, Aviation Revenue Refunding Bonds, VRDN, Series V,
3.45% due 10/01/2007 (a) 34,710
3,900 Dade County, Florida, IDA, Exempt Facilities Revenue Refunding Bonds
(Florida Power and Light Co.), VRDN, 3.70% due 6/01/2021 (a) 3,900
5,700 Dade County, Florida, Special Obligation, Capital Asset Acquisition
Bonds, VRDN, 3.70% due 10/01/2010 (a) 5,700
23,700 Eagle Tax Exempt Trust, 3.10% due 4/01/1997 23,700
6,300 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric
Company Project), VRDN, 3.75% due 9/01/2025 (a) 6,300
Jacksonville, Florida, Electric Authority Revenue Bonds, CP:
13,300 3.60% due 8/20/1997 13,300
12,200 TAN, 3.60% due 8/22/1997 12,200
10,000 Orange County Florida School District, TAN, 4% due 9/15/1997 10,011
52,700 Palm Beach County, Florida, School District, TAN, 4.50% due 9/26/1997 53,010
11,100 Pinellas County, Florida, Health Facilities Authority, Revenue Refunding
Bonds (Pooled Hospital Loan Program), DATES, 3.65% due 12/01/2015 (a) 11,100
4,900 Saint Lucie County, Florida, Solid Waste Disposal Revenue Bonds (Florida
Power & Light Co. Project), VRDN, AMT, 3.75% due 1/01/2027 (a) 4,900
6,660 Volusia County, Florida, Health Facilities Authority Revenue Bonds
(Pooled Hospital Loan Program), ACES, 3.65% due 11/01/2015 (a) (f) 6,660
Georgia-- Burke County, Georgia, Development Authority, PCR (Georgia Power
3.7% Company--Plant Vogtle Project), VRDN (a):
52,900 2nd Series, 3.60% due 4/01/2025 52,900
28,900 4th Series, 3.70% due 7/01/2024 28,900
22,400 Refunding, 3.60% due 9/01/2026 22,400
26,700 Refunding, 3rd Series, 3.60% due 9/01/2025 26,700
18,000 Burke County, Georgia, Development Authority, PCR (Oglethorpe Power
Corporation--Plant Vogtle Project), Refunding, Series A, 3.60% due
12/01/1997 (e) 18,000
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Georgia $ 12,100 Burke County, Georgia, Development Authority, PCR (Oglethorpe Power
(concluded) Corporation), VRDN, Series A, 3.35% due 1/01/2016 (a) (f) $ 12,100
41,000 Cobb County, Georgia, TAN, 4% due 12/31/1997 41,088
Eagle Tax Exempt Trust:
4,100 3.60% due 9/01/1997 4,100
9,500 VRDN, 3.45% due 11/01/2005 (a) 9,500
9,500 VRDN, 3.40% due 7/01/2020 (a) 9,500
8,938 Georgia Municipal Association, Pooled Bonds, COP, VRDN, 3.40% due
12/15/2020 (a) (c) 8,938
9,390 Georgia State Residential Finance Authority, Home Ownership Mortgage
Bonds, AMT, Series A, 3.60% due 9/01/1997 (d) 9,390
13,145 Georgia State, Tender Options, Series 79-A, 3.50% due 5/06/1997 13,145
Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax Revenue
Bonds:
7,005 3.55% due 7/01/2002 7,005
7,340 3.55% due 7/01/2004 7,340
Monroe County, Georgia, Development Authority, PCR (Georgia Power Co.),
VRDN (a):
14,900 1st Series, 3.60% due 7/01/2025 14,900
24,900 2nd Series, 3.70% due 7/01/2025 24,900
Illinois-- 7,000 Chicago, Illinois, IDR (Enterprise Center VIII Project), VRDN, AMT,
10.8% 3.65% due 6/01/2022 (a) 7,000
Chicago, Illinois, O'Hare International Airport Revenue Bonds (American
Airlines) (a):
8,800 DATES, Series C, 3.70% due 12/01/2017 8,800
13,300 VRDN, Series A, 3.70% due 12/01/2017 13,300
Chicago, Illinois, O'Hare International Airport Revenue Bonds (General
Airport Second Lien), VRDN (a):
6,630 Series B, 3.50% due 1/01/2015 6,630
20,500 Series C, 3.50% due 1/01/2018 20,500
14,800 Chicago, Illinois, O'Hare International Airport, Special Facilities Revenue
Bonds (Compagnie Nationale--Air France), VRDN, AMT, 3.55% due 5/01/2018 (a) 14,800
Chicago, Illinois, Tender Notes:
121,757 3.55% due 10/31/1997 121,757
23,600 VRDN, Series B, 3.40% due 1/01/2012 (a) 23,600
46,000 Cook County, Illinois, VRDN, 3.45% due 12/01/2001 (a) 46,000
13,800 Eagle Tax Exempt Trust, VRDN, Series 95, Class 7090, 3.61% due 1/01/2024 (a) 13,800
Illinois Development Finance Authority, PCR, Refunding (Commonwealth
Edison Company Project), VRDN, Series B (a):
12,000 3.50% due 12/01/2006 (e) 12,000
42,200 3.45% due 10/15/2014 42,200
Illinois Development Finance Authority, Revenue Bonds, VRDN (a):
25,100 (Lyric Opera Chicago Project), 3.50% due 12/01/2028 25,100
6,000 Refunding (Olin Corporation Project), Series A, 3.70% due 6/01/2004 6,000
Illinois Educational Facilities Authority Revenue Bonds, VRDN (a):
17,300 (Art Institute of Chicago), 3.55% due 3/01/2027 17,300
5,200 (Chicago Historical Society), 3.50% due 12/01/2025 5,200
27,100 (Illinois Institute of Technology), Series A, 3.50% due 9/01/2025 27,100
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (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, 3.75% due 11/01/2020 $ 6,900
13,200 (Decatur Memorial Hospital Project), VRDN, Series A, 3.50% due
11/15/2024 (c) 13,200
29,550 (Franciscan Sisters Health Service), VRDN, 3.80% due 1/01/2018 29,550
15,100 (Highland Park Hospital), VRDN, Series B, 3.50% due 10/01/2012 (f) 15,100
8,500 (Hospital Sisters Services, Inc.), UPDATES, Series E, 3.50% due
12/01/2014 (c) 8,500
42,600 (Northwest Community Hospital), VRDN, 3.45% due 7/01/2025 42,600
72,200 (Northwestern Memorial Hospital), VRDN, 3.65% due 8/15/2025 72,200
7,000 (Pooled Financing Program), VRDN, Series F, 3.45% due 8/01/2015 7,000
30,000 Refunding (Advocate Health Care), VRDN, Series B, 3.55% due 8/15/2022 30,000
105,500 (Resurrection Health Care System), VRDN, 3.70% due 5/01/2011 105,500
Illinois Health Facilities Authority Revenue Bonds (Evanston Hospital
Corporation Project):
30,000 CP, 3.65% due 10/31/1997 30,000
15,000 CP, 3.70% due 12/01/1997 15,000
12,000 CP, Series A, 3.85% due 10/15/1997 12,000
10,000 Series A, 3.65% due 5/29/1997 10,000
10,000 Series B, 3.65% due 5/29/1997 10,000
10,000 Series C, 3.65% due 5/29/1997 10,000
10,000 Series D, 3.65% due 5/29/1997 10,000
5,000 Series E, 3.65% due 5/29/1997 5,000
18,815 Illinois State, GO, VRDN, UT, 3.50% due 8/01/2019 (a) (c) 18,815
4,900 Illinois Student Assistance Commission, Student Loan Revenue Bonds,
VRDN, AMT, Series A, 3.55% due 3/01/2016 (a) 4,900
21,350 Regional Transportation Authority, Illinois, VRDN, 3.50% 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, 3.75% due 8/01/2021 (a) 11,100
Indiana--4.4% 28,660 Evansville, Indiana, Hospital Authority Revenue Bonds (Saint Mary's Medical
Center--Daughters of Charity), VRDN, 3.45% due 11/01/2013 (a) 28,660
Fort Wayne, Indiana, Hospital Authority Revenue Bonds (Parkview Memorial
Hospital), VRDN (a):
1,645 Series B, 3.40% due 1/01/2016 1,645
2,700 Series B, 3.45% due 1/01/2020 2,700
3,505 Series C, 3.40% due 1/01/2016 3,505
5,670 Series D, 3.40% due 1/01/2016 5,670
Indiana Bond Bank, Advance Funding Notes:
19,000 Series A-1, 4.25% due 7/29/1997 19,047
87,200 Series A-2, 4.25% due 1/21/1998 87,576
Indiana Health Facilities Financing Authority, Hospital Revenue Bonds (a):
<PAGE> 25,700 (Clarian Health Partners Inc.), VRDN, Series B, 3.50% due 2/15/2026 25,700
5,400 (Daughters of Charity National Health System), ACES, Series A, 3.45%
due 11/01/2022 5,400
1,700 (Daughters of Charity National Health System), ACES, Series B, 3.45% due
11/01/2022 1,700
18,200 Refunding (Clarian Health Partners Inc.), VRDN, Series A, 3.50% due
2/15/2026 (c) 18,200
11,750 Indiana Health Facilities Financing Authority Revenue Bonds (Capital Access
Designated Pool), VRDN, 3.45% due 1/01/2012 (a) 11,750
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
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Indiana $ 8,500 Indianapolis, Indiana, Bond Bank Notes (Local Public Improvement), Series E,
(concluded) 4.125% due 7/10/1997 $ 8,514
Jasper County, Indiana, PCR, Refunding (Northern Indiana Public Service Co.),
VRDN (a):
8,000 Series B, 3.75% due 6/01/2013 8,000
20,700 Series C, 3.75% due 4/01/2019 20,700
45,325 Marion County, Indiana, Hospital Authority, Hospital Facility Revenue Bonds
(Saint Vincent's Hospital and Healthcare Center--Daughters of Charity), VRDN,
3.45% due 11/01/2013 (a) 45,325
9,400 Princeton, Indiana, PCR, Refunding (PSI Energy Inc. Project), VRDN, 3.65%
due 4/01/2022 (a) 9,400
10,600 Rockport, Indiana, PCR, Refunding (AEP Generating Co. Project), VRDN, Series A,
3.70% due 7/01/2025 (a) (e) 10,600
Iowa--1.6% 5,000 Chillicothe, Iowa, PCR, Refunding (Iowa-Illinois Gas & Electric Project), VRDN,
3.55% due 1/01/2023 (a) 5,000
Iowa Finance Authority, Solid Waste Disposal Revenue Bonds (Cedar River Paper
Company Project), VRDN, Series A (a):
52,500 3.75% due 7/01/2023 52,500
42,000 AMT, 3.75% due 6/01/2024 42,000
20,500 AMT, 3.75% due 5/01/2025 20,500
3,700 Iowa Higher Education Loan Authority Revenue Bonds (Private College
Facilities), ACES, 3.45% due 12/01/2015 (a) (c) 3,700
14,500 Iowa Student Loan Liquidity Corporation, Student Loan Revenue Bonds,
VRDN, AMT, Series B, 3.45% due 12/01/2013 (a) (e) 14,500
<PAGE>
Kansas--0.6% 9,100 Butler County, Kansas, Solid Waste Disposal Facilities Revenue Bonds (Texaco
Refining and Marketing Project), VRDN, AMT, Series A, 3.80% due 8/01/2024 (a) 9,100
23,700 Kansas State, Department of Transportation, Highway Revenue Bonds, VRDN,
Series B, 3.35% due 9/01/2014 (a) 23,700
Wichita, Kansas, Hospital Revenue Bonds (CSJ Health Systems), VRDN (a):
1,000 3.65% due 10/01/2002 1,000
15,300 3.65% due 10/01/2008 15,300
Kentucky--1.2% 5,100 Ashland, Kentucky, PCR (Merck & Co./Calgon Carbon Project), Series A, 3.65%
due 10/01/2006 5,100
22,700 Carroll County, Kentucky, Solid Waste Disposal Facilities Revenue Bonds
(Kentucky Utilities Co. Project), VRDN, AMT, Series A, 3.80% due 11/01/2024 (a) 22,700
Daviess County, Kentucky, Solid Waste Disposal Facilities Revenue Bonds
(Scott Paper Co. Project), VRDN, AMT (a):
6,000 Series A, 3.75% due 12/01/2023 6,000
9,300 Series A, 3.75% due 5/01/2024 9,300
8,100 Series B, 3.75% due 12/01/2023 8,100
21,700 Series B, 3.75% due 5/01/2024 21,700
11,100 Kentucky Economic Development Finance Authority Revenue Bonds
(Sisters of Charity), VRDN, 3.75% due 11/01/2020 (a) 11,100
15,000 Trimble County, Kentucky, PCR, Refunding (Louisville Gas & Electric Co.), CP,
Series A, 3.50% due 9/11/1997 15,000
Louisiana--2.6% 31,500 Calcasieu Parish, Louisiana, IDB, Environmental Revenue Refunding Bonds
(Citgo Petroleum Corporation), VRDN, AMT, 3.80% due 3/01/2025 (a) 31,500
8,800 Eagle Tax Exempt Trust, VRDN, Series 94, Class 3803, 3.61% due 5/01/2008 (a) 8,800
7,500 East Baton Rouge Parish, Louisiana, PCR, Refunding (Exxon Project), VRDN, 3.60%
due 3/01/2022 (a) 7,500
5,200 Louisiana Public Facilities Authority, Hospital Revenue Bonds (Hospital Equipment
Financing and Refunding Program), VRDN, Series A, 3.70% due 12/01/2005 (a) 5,200
Louisiana Public Facilities Authority, Hospital Revenue Bonds
(Our Lady of the Lake Regional Medical Center), CP (h):
13,500 3.55% due 4/16/1997 13,500
33,060 3.55% due 4/17/1997 33,060
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Louisiana $ 17,000 Louisiana Public Facilities Authority Revenue Bonds (Kenner Hotel Ltd.),
(concluded) VRDN, 3.65% due 12/01/2015 (a) $ 17,000
35,050 Louisiana State Offshore Terminal Authority, Deepwater Port Revenue
Refunding Bonds (Loop Inc.--First Stage), ACES, 3.75% due 9/01/2006 (a) 35,050
14,100 Plaquemines Parish, Louisiana, Environmental Revenue Bonds (BP
Exploration & Oil), VRDN, AMT, 3.80% due 10/01/2024 (a) 14,100
Saint Charles Parish, Louisiana, PCR, VRDN (a):
19,200 (Shell Oil Company--Norco Project), AMT, 3.75% due 11/01/2021 19,200
4,400 (Shell Oil Company Project), 3.35% due 6/01/2005 4,400
21,000 (Shell Oil Company Project), AMT, Series A, 3.75% due 10/01/2022 21,000
4,400 South Louisiana Port Commission, Louisiana, Revenue Refunding Bonds
(Occidental Petroleum Corp. Project), VRDN, 3.40% due 7/01/2018 (a) 4,400
Maine--0.3% 16,000 Jay, Maine, Solid Waste Disposal Revenue Bonds (International Paper),
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, 3.45% due 12/01/2025 1,250
1,450 Series F, 3.45% due 12/01/2025 1,450
7,000 Maine State, GO, TAN, 4.50% due 6/27/1997 7,010
Maryland--1.2% 35,700 Baltimore, Maryland, Port Facilities Revenue Bonds (Occidental Petroleum),
VRDN, 3.40% due 10/14/2011 (a) 35,700
Maryland State Health and Higher Educational Facilities Authority
Revenue Bonds, VRDN (a):
23,400 (Pooled Loan Program), Series A, 3.50% due 4/01/2035 23,400
24,200 (Saint Agnes Hospital--Daughters of Charity), 3.45% due 7/01/2013 24,200
Washington Suburban Sanitation District, Maryland, UT:
10,000 BAN, 3.40% due 1/01/1999 10,000
4,000 Water Supply Refunding Bonds, 5.75% due 11/01/1997 4,046
Massachusetts-- 32,130 Clipper Tax Exempt Trust 1994-2, VRDN, Class A, 3.36% due 10/17/2002 (a) 32,130
2.0% 20,900 Eagle Tax Exempt Trust, VRDN, Series J, 3.61% due 8/01/2005 (a) 20,900
10,000 Lynn, Massachusetts, UT, 4.25% due 8/14/1997 10,012
10,000 Lynn, Massachusetts, Water and Sewer Commission, BAN, Series A, UT,
4.25% due 10/08/1997 10,010
43,500 Massachusetts Bay Transportation Authority Notes, Series B, 4.75% due
9/05/1997 43,762
21,000 Massachusetts State Health and Educational Facilities Authority Revenue Bonds
(Capital Asset Program), VRDN, Series D, 3.65% due 1/01/2035 (a) (c) 21,000
2,000 Massachusetts State Municipal Wholesale Electric Company, Power Supply
System Revenue Bonds, VRDN, Series C, 3.30% due 7/01/2019 (a) 2,000
6,100 Massachusetts State Port Authority, Revenue Refunding Bonds, VRDN, AMT,
Series B, 3.65% due 7/01/2018 (a) 6,100
6,900 Massachusetts State, UPDATES, Series B, 3.60% due 12/01/1997 (a) 6,900
8,000 Pioneer Valley, Massachusetts, Transit Authority, RAN, 4.63% due 8/08/1997 8,014
9,000 Springfield, Massachusetts, BAN, 4.60% due 7/11/1997 9,012
<PAGE>
Michigan--5.5% 6,300 Delta County, Michigan, Economic Development Corp., Environmental
Improvement Revenue Refunding Bonds (Mead Escambia Paper), VRDN,
Series D, 3.60% due 12/01/2023 (a) 6,300
8,000 Eagle Tax Exempt Trust, VRDN, Series 94, Class 2201, 3.55% due 6/01/2021 (a) 8,000
17,200 Grand Rapids, Michigan, Water Supply System, Revenue Refunding Bonds,
VRDN, 3.30% due 1/01/2020 (a) (f) 17,200
8,460 Holly, Michigan, Area School District, VRDN, UT, 3.50% due 5/01/2020 (a) (f) 8,460
331,600 Michigan State, CP, 4.50% due 9/30/1997 333,292
16,000 Michigan State Building Authority Revenue Bonds, CP, Series 1, 3.65% due
5/01/1997 16,000
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Michigan $ 4,150 Michigan State Hospital Finance Authority Revenue Bonds (Providence
(concluded) Hospital--Daughters of Charity Systems, Incorporated), VRDN, 3.45% due
11/01/2014 (a) $ 4,150
Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds,
VRDN (a):
20,400 (Consumers Power Company Project), Series A, 3.65% due 6/15/2010 20,400
6,150 (Detroit Edison Co.), Series CC, 3.65% due 9/01/2030 6,150
1,000 Michigan State Strategic Fund, Solid Waste Disposal Revenue Bonds
(Grayling Generating Project), VRDN, AMT, 3.50% 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, 3.65%
due 10/01/2024 (a) 9,500
5,200 Royal Oak, Michigan, Hospital Finance Authority Revenue Bonds (William
Beaumont Hospital), VRDN, Series J, 3.60% due 1/01/2003 (a) 5,200
University of Michigan, University Hospital Revenue Bonds, VRDN, Series A (a):
16,000 (Medical Service Plan), 3.75% due 12/01/2027 16,000
9,800 Refunding, 3.75% due 12/01/2019 9,800
Minnesota--0.7% Eagle Tax Exempt Trust, VRDN (a):
11,100 Series 1994-C-5, 3.61% due 2/01/2015 11,100
45,000 Series A, 3.61% due 8/01/2006 45,000
Mississippi-- 10,000 Harrison County, Mississippi, PCR, Refunding (E.I. du Pont de Nemours & Co.),
0.7% VRDN, 3.75% due 9/01/2010 (a) 10,000
Jackson County, Mississippi, PCR, Refunding (Chevron USA, Inc. Project),
VRDN (a):
1,800 3.70% due 12/01/2016 1,800
2,000 3.70% due 6/01/2023 2,000
27,000 Jackson County, Mississippi, Port Facility Revenue Refunding Bonds
(Chevron USA, Inc. Project), VRDN, 3.65% due 6/01/2023 (a) 27,000
3,000 Mississippi Hospital Equipment and Facilities Authority Revenue Bonds
(Mississippi Baptist Medical Center), VRDN, Series B, 3.40% due 7/01/2012 (a) 3,000
16,415 Perry County, Mississippi, PCR, Refunding (Leaf River Forest Project),
VRDN, 3.75% due 3/01/2002 (a) 16,415
<PAGE>
Missouri--1.3% 30,000 Eagle Tax Exempt Trust, VRDN, Series 1993-E, 3.61% due 8/01/2006 (a) 30,000
Missouri Higher Education Loan Authority, Student Loan Revenue Bonds, VRDN,
AMT (a) (b):
7,800 Series A, 3.50% due 6/01/2017 7,800
11,700 Series B, 3.50% due 6/01/2020 11,700
Missouri State Health and Educational Facilities Authority, Health Facilities
Revenue Bonds (Sisters of Mercy Health System), VRDN (a):
30,000 Refunding, Series B, 3.45% due 12/01/2016 30,000
5,000 Series A, 3.45% due 6/01/2019 5,000
27,700 Saint Louis County, Missouri, IDA, Hospital Revenue Bonds (DePaul Health
Center--Daughters of Charity), VRDN, 3.45% due 11/01/2014 (a) 27,700
Montana--0.1% 6,800 Billings, Montana, M/F Housing Revenue Bonds (West Park Retirement Center),
VRDN, 3.45% due 12/01/2007 (a) 6,800
Nebraska--1.0% Nebraska Higher Education Loan Program, Multiple Mode Student Loan
Revenue Bonds, VRDN (a) (b) (c):
12,800 Series A, 3.45% due 12/01/2015 12,800
13,600 Series B, 3.45% due 12/01/2015 13,600
3,100 Series C, 3.45% due 12/01/2015 3,100
17,600 Series D, 3.45% due 12/01/2015 17,600
Nebraska Higher Education Loan Program, Student Loan Revenue Bonds, VRDN,
AMT (a) (b):
3,550 Series A, 3.55% due 12/01/2016 3,550
30,150 Series C, 3.55% due 8/01/2018 30,150
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Nevada--0.1% $ 7,075 Nevada Housing Division (Mesquite Bluffs Apartments), VRDN, AMT, Series B,
3.75% due 5/01/2028 (a) $ 7,075
New Hampshire-- 1,400 New Hampshire Higher Educational and Health Facilities Authority Revenue
0.7% Bonds (VHA New England Inc.), VRDN, Series D, 3.45% due 12/01/2025 (a) (e) 1,400
38,400 New Hampshire State, Business Finance Authority, PCR, Refunding (Public
Service Co.), VRDN, Series E, 3.55% 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, 3.50% due 5/01/2025 (a) 5,700
10,000 New Hampshire State, IDA, Solid Waste Disposal Facility Revenue Bonds
(United Illuminating Co. Project), AMT, Series A, 3.55% due 9/01/1997 10,000
New Jersey-- 20,000 Casino Reinvestment Development Authority, New Jersey, BAN (Corridor
0.5% Projects), Series A, 4.50% due 6/03/1997 20,013
9,600 East Orange, New Jersey, BAN, 4.75% due 8/28/1997 9,619
15,000 State of New Jersey, CP, 3.40% due 5/08/1997 15,000
<PAGE>
New Mexico-- 15,500 Albuquerque, New Mexico, Hospital Revenue Bonds (Saint Joseph's Sisters
1.0% of Charity), VRDN, 3.45% due 5/15/2022 (a) 15,500
Farmington, New Mexico, PCR (Arizona Public Service Co.), VRDN (a):
11,300 AMT, Series C, 3.75% due 9/01/2024 11,300
36,000 Series A, 3.60% due 5/01/2024 36,000
14,150 Series B, 3.75% due 9/01/2024 14,150
3,700 Hurley, New Mexico, PCR (Kennecott Santa Fe), VRDN, 3.70% due 12/01/2015 (a) 3,700
New York--3.1% Eagle Tax Exempt Trust, VRDN (a):
27,300 3.61% due 2/15/2007 27,300
7,100 Series 1994-C2, 3.56% due 6/15/2018 7,100
New York City, New York, GO, VRDN, UT (a):
3,000 Sub-Series A-7, 3.70% due 8/01/2019 3,000
8,400 Sub-Series B-3, 3.65% due 8/15/2004 (c) 8,400
New York City, New York, Municipal Water Finance Authority, Water and Sewer
System Revenue Bonds, VRDN (a) (f):
40,500 Series 1993-C, 3.65% due 6/15/2022 40,500
3,500 Series G, 3.75% due 6/15/2024 3,500
New York City, New York, RAN, UT:
70,360 Series A, 4.50% due 4/15/1997 70,383
30,000 Series B, 4.50% due 6/30/1997 30,064
12,500 New York Municipal Assistance Co., New York, CP, 4% due 4/01/1997 12,500
6,500 New York State Dormitory Authority Revenue Bonds (Putters-14A), VRDN,
3.55% 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
7,600 New York State, Local Government Assistance Corporation, VRDN, Series F,
3.35% due 4/01/2025 (a) 7,600
21,500 Westchester County, New York, TAN, UT, 3.48% due 12/11/1997 21,497
North Carolina-- 5,000 Charlotte--Mecklenberg Hospital Authority, North Carolina, Health Care
1.7% System Revenue Bonds, VRDN, Series D, 3.35% due 1/15/2026 (a) 5,000
Craven County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (Cravenwood Energy Project), VRDN, AMT (a):
4,500 Series B, 3.80% due 5/01/2011 4,500
3,000 Series C, 3.80% due 5/01/2011 3,000
North Carolina Educational Facilities Finance Agency Revenue Bonds, VRDN (a):
23,950 (Bowman Grey School of Medicine Project), 3.50% due 9/01/2020 23,950
20,240 (Duke University Project), Series A, 3.35% due 6/01/2027 20,240
15,000 (Duke University Project), Series B, 3.35% due 12/01/2021 15,000
16,875 North Carolina Medical Care Commission, Health Care Facilities Revenue
Bonds (Cabarrus Memorial Hospital Project), VRDN, 3.45% due 3/01/2012 (a) 16,875
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
North Carolina North Carolina Medical Care Commission, Hospital Revenue Bonds, VRDN (a):
(concluded) $ 1,700 (Duke University Hospital), Series B, 3.35% due 6/01/2015 $ 1,700
2,000 (Duke University Hospital), Series C, 3.35% due 6/01/2015 2,000
28,500 (North Carolina Baptist Hospital Project), Series B, 3.45% due 6/01/2022 28,500
5,400 Raleigh--Durham, North Carolina, Airport Authority, Special Facility Revenue
Refunding Bonds (American Airlines), VRDN, Series B, 3.70% due 11/01/2015 (a) 5,400
17,000 Wake County, North Carolina, Industrial Facilities and Pollution Control
Financing Authority Revenue Bonds (Carolina Power and Light Company
Project), DATES, 3.80% due 3/01/2017 (a) 17,000
North Dakota-- 13,000 North Dakota, HFA, Home Mortgage Finance Revenue Bonds, AMT, Series C,
0.1% 3.85% due 4/03/1997 13,000
Ohio--1.4% 37,395 Cincinnati, Ohio, City School District, TAN, Series C, 5.41% due 7/10/1997 37,576
20,000 Clermont County, Hospital Facilities Revenue Refunding Bonds
(Mercy Health System), VRDN, Series A, 3.45% due 12/01/2021 (a) 20,000
13,250 Cleveland, Ohio, City School District, RAN, 5% due 6/01/1997 (e) 13,285
10,500 Eagle Tax Exempt Trust, VRDN, 3.56% due 7/01/2015 (a) 10,500
19,000 Franklin County, Ohio, Hospital Revenue Refunding &Improvement Bonds
(US Health Corp.--Columbus), VRDN, Series A, 3.45% due 12/01/2021 (a) 19,000
1,865 Ohio HFA, M/F Housing Revenue Bonds (Kenwood Congregate Retirement
Program), VRDN, 3.35% due 12/01/2015 (a) 1,865
5,137 Ohio School District, COP (Cash Flow Borrowing Program), RAN, Series B,
4.53% due 6/30/1997 5,143
8,100 Ohio State Air Quality Development Authority, Revenue Refunding Bonds
(Cincinnati Gas & Electric), VRDN, Series B, 3.65% due 9/01/2030 (a) 8,100
3,000 Scioto County, Ohio, Hospital Facilities Revenue Bonds (VHA Central Inc.--
Capital Asset), VRDN, Series C, 3.40% due 12/01/2025 (a) (e) 3,000
Oklahoma--1.1% 20,000 Garfield County, Oklahoma, Industrial Authority, PCR, Refunding (Oklahoma Gas
and Electric Company Project), VRDN, Series A, 3.50% due 1/01/2025 (a) 20,000
10,250 Grand River, Oklahoma, Dam Authority Revenue Bonds, VRDN, Series 42,
3.50% due 6/01/2009 (a) (e) 10,250
14,200 Muskogee, Oklahoma, Industrial Trust, PCR, Refunding (Oklahoma Gas and
Electric Co.), VRDN, Series A, 3.55% due 1/01/2025 (a) 14,200
Oklahoma State Industrial Authority Revenue Bonds (Baptist Medical Center),
VRDN (a):
10,500 Series A, 3.55% due 8/15/2024 10,500
40,500 Series B, 3.55% due 8/15/2023 40,500
Oregon--1.8% 8,900 Medford, Oregon, Hospital Facilities Authority Revenue Bonds
(Gross-Rogue Valley Health Services), VRDN, 3.85% due 10/01/2016 (a) 8,900
Oregon State, GO, Veterans' Welfare Bonds, VRDN (a):
53,000 Series 73-E, 3.40% due 12/01/2016 53,000
15,000 Series 73-G, 3.40% due 12/01/2018 15,000
64,300 Series 73-H, 3.40% due 12/01/2019 64,300
8,000 Portland, Oregon, M/F Revenue Bonds (Multi Mode Housing--Union Station),
VRDN, AMT, 3.70% due 12/01/2027 (a) 8,000
<PAGE>
Pennsylvania-- 27,000 Allegheny County, Pennsylvania, IDA, PCR (Duquesne Light Project), CP,
4.0% Series A, 3.70% due 2/05/1998 27,000
2,500 Butler County, Pennsylvania, IDA, IDR, Refunding (Wetterau Finance Co. Project),
VRDN, 3.60% due 12/01/2014 (a) 2,500
Eagle Tax Exempt Trust, VRDN (a):
12,300 3.61% due 5/01/2015 12,300
17,000 Series 94, Class 3803, 3.61% due 5/01/2008 17,000
4,600 Geisinger, Pennsylvania, Health Systems Revenue Bonds, VRDN, Series B,
3.70% due 7/01/2022 (a) 4,600
30,000 Harrisburg, Pennsylvania, Revenue Bonds (Pooled Financing Fund), VRDN,
3.60% due 7/01/2021 (a) 30,000
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Pennsylvania $ 3,700 Montgomery County, Pennsylvania, Higher Education and Health Authority,
(concluded) Hospital Revenue Bonds (Holy Redeemer Hospital), VRDN, 3.35%
due 9/01/2018 (a) (e) $ 3,700
Pennsylvania State Higher Education Assistance Agency, Student Loan
Revenue Bonds, VRDN, AMT (a):
5,400 Series A, 3.50% due 1/01/2018 (b) 5,400
26,950 Series A, 3.50% due 12/01/2024 (b) 26,950
10,000 Series B, 3.50% due 7/01/2018 10,000
19,400 Pennsylvania State Higher Educational Facilities Authority, College and
University Revenue Bonds (Temple University), VRDN, 3.70% due 10/01/2009 (a) 19,400
Pennsylvania State Higher Educational Facilities Authority, College and
University Revenue Refunding Bonds (Carnegie Mellon University), VRDN (a):
23,300 Series A, 3.70% due 11/01/2025 23,300
5,000 Series B, 3.70% due 11/01/2027 5,000
15,000 Series C, 3.70% due 11/01/2029 15,000
13,200 Series D, 3.70% due 11/01/2030 13,200
15,000 Pennsylvania State Higher Educational Facilities Authority, Health Services
Revenue Bonds (University of Pennsylvania), ACES, Series B,
3.40% due 1/01/2024 (a) 15,000
10,000 Pennsylvania State, TAN, First Series, 4.50% due 6/30/1997 10,023
7,500 Pennsylvania State University (University Project), Series A, 4.50% due 11/25/1997 7,548
Philadelphia, Pennsylvania, Hospital and Higher Education Facilities Authority,
Hospital Revenue Bonds (Children's Hospital of Philadelphia Project), VRDN (a):
27,450 3.70% due 3/01/2027 27,450
10,900 Series A, 3.70% due 3/01/2027 10,900
6,900 Philadelphia, Pennsylvania, IDA, Revenue Bonds (Institute for Cancer Research
Project), VRDN, Series A, 3.70% due 7/01/2013 (a) 6,900
33,600 Philadelphia, Pennsylvania, TRAN, Series A, 4.50% due 6/30/1997 33,644
8,900 Sayre, Pennsylvania, Health Care Facilities Authority Revenue Bonds
(VHA of Pennsylvania, Inc.--Capital Assets Financing Program), VRDN,
Series L, 3.40% due 12/01/2020 (a) (e) 8,900
<PAGE>
South Carolina-- 2,000 Berkeley County, South Carolina, PCR, Refunding (Amoco Chemical Co. Project),
1.3% VRDN, 3.65% due 7/01/2012 (a) 2,000
17,950 Charleston County, South Carolina, Industrial Revenue Refunding Bonds
(Massey Coal Terminal), VRDN, 3.75% due 1/01/2007 (a) 17,950
35,000 Florence County, South Carolina, Solid Waste Disposal and Wastewater
Treatment Facilities Revenue Bonds (Roche Carolina Inc. Project),
VRDN, AMT, 3.65% due 4/01/2026 (a) 35,000
22,400 Orangeburg County, South Carolina, Solid Waste Disposal Facilities Revenue
Bonds (South Carolina Electric & Gas), VRDN, AMT, 3.85% due 11/01/2024 (a) 22,400
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), 3.90% due 12/01/2010 5,400
14,100 AMT (Wellman, Inc. Project), 3.90% due 12/01/2012 14,100
4,550 (Saint Francis Hospital Project), 3.70% due 7/01/2022 4,550
Tennessee--1.3% 16,000 Clarksville, Tennessee, Public Building Authority Revenue Bonds (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, 3.50% due 9/01/2001 (a) 8,100
14,200 Memphis--Shelby County, Tennessee, Airport Authority Revenue Bonds, VRDN,
AMT, Series B, 3.55% due 3/01/2010 (a) 14,200
13,000 Montgomery County, Tennessee, Public Building Authority Revenue Bonds
(Pooled Financing--Montgomery County Loan), VRDN, 3.50% due 7/01/2019 (a) 13,000
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Tennessee $ 14,955 Morristown, Tennessee, IDB, PCR, Refunding (Akzo Chemicals, Inc. Project),
(concluded) VRDN, 3.50% due 8/01/2001 (a) $ 14,955
5,500 Nashville and Davidson Counties, Tennessee, Metropolitan Health and
Educational Facilities Board Revenue Bonds (Vanderbilt University Project),
Series 85-A, 3.65% due 1/15/1998 5,500
14,000 Tennessee State, BAN, VRDN, Series C, 3.45% due 7/02/2001 (a) 14,000
12,000 Volunteer State Student Funding Corporation, Tennessee, Student Loan
Revenue Bonds, VRDN, AMT, Series A-1, 3.60% due 12/01/2017 (a) 12,000
<PAGE>
Texas--18.6% Brazos River Authority, Texas, PCR (Texas Utilities Electric Co.),
VRDN, AMT (a):
29,055 Refunding, Series B, 3.75% due 6/01/2030 29,055
21,305 Refunding, Series B, 3.75% due 2/01/2032 (c) 21,305
62,355 Refunding, Series C, 3.75% due 6/01/2030 62,355
8,000 Series A, 3.75% due 4/01/2030 8,000
29,500 Brazos River Authority, Texas, Revenue Refunding Bonds (Houston Light
and Power Co.), VRDN, AMT, Series 1997, 3.75% due 11/01/2018 (a) (e) 29,500
24,700 Brazos, Texas, Higher Education Authority Incorporated, Student Loan
Revenue Bonds, VRDN, AMT, Series B-1, 3.45% due 6/01/2023 (a) (b) 24,700
4,000 Corpus Christi, Texas, IDR (Dedietrich USA Incorporated Project), VRDN,
AMT, 3.60% due 11/01/2008 (a) 4,000
6,600 Dallas-Fort Worth, Texas, Regional Airport Revenue Bonds, VRDN, Series 5,
3.50% due 11/01/2015 (a) (f) 6,600
7,100 Grapevine, Texas, IDR, Airport Revenue Refunding Bonds (Southern Air
Transportation Project), VRDN, 3.50% due 3/01/2010 (a) 7,100
Greater Texas Student Loan Corp., Student Loan Revenue Refunding Bonds,
AMT (b):
15,000 Series A, 3.70% due 3/01/1998 15,000
4,250 Series B, 3.85% due 6/01/1997 4,250
Gulf Coast, Texas, IDA, Solid Waste Disposal Revenue Bonds (Citgo Petroleum
Corp. Project), VRDN, AMT (a):
13,700 3.80% due 5/01/2025 13,700
15,400 3.80% due 4/01/2026 15,400
7,000 Gulf Coast Waste Disposal Authority, Texas, Environmental Improvement
Revenue Bonds (Amoco Oil Co. Project), 3.45% due 9/01/1997 7,000
Gulf Coast Waste Disposal Authority, Texas, PCR, VRDN, AMT (a):
28,500 (Amoco Oil Co. Project), 3.75% due 5/01/2023 28,500
4,400 Refunding (Exxon Project), 3.65% due 6/01/2020 4,400
Gulf Coast Waste Disposal Authority, Texas, Solid Waste Disposal Revenue
Bonds (Amoco Oil Co. Project), VRDN, AMT (a):
23,000 3.75% due 7/01/2027 23,000
27,600 Refunding, 3.75% due 8/01/2023 27,600
17,710 Harris County, Texas, GO, VRDN, Series 45, 3.50% due 8/15/2016 (a) (f) 17,710
Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds, VRDN (a):
180,000 (Methodist Hospital), 3.70% due 12/01/2025 180,000
36,700 Refunding (Methodist Hospital), 3.70% due 12/01/2026 36,700
14,100 (Saint Luke's Episcopal Hospital), Series B, 3.70% due 2/15/2016 14,100
10,800 (Saint Luke's Episcopal Hospital), Series C, 3.70% due 2/15/2016 10,800
17,100 (Saint Luke's Episcopal Hospital), Series D, 3.70% due 2/15/2016 17,100
Harris County, Texas, Industrial Development Corporation, PCR (Exxon Project),
DATES (a):
7,100 Series 1984-A, 3.60% due 3/01/2024 7,100
12,900 Series 1984-B, 3.60% due 3/01/2024 12,900
46,100 Harris County, Texas, Industrial Development Corporation, Solid Waste
Disposal Revenue Bonds (Deer Park Limited Partnership), VRDN, AMT,
Series A, 3.80% due 2/01/2023 (a) 46,100
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (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):
(continued) $ 25,000 Sub-Lien H, 3.40% due 8/01/2020 $ 25,000
15,000 UT, Sub-Lien D, 3.30% due 8/01/2015 15,000
Hockley County, Texas, Industrial Development Corporation, PCR:
11,940 (Amoco Project), 3.60% due 5/01/1997 11,940
34,685 (Amoco Project--Standard Oil Co.), 3.60% due 9/01/1997 34,706
Houston, Texas, CP, Series A:
10,900 3.30% due 5/01/1997 10,900
10,000 3.35% due 5/09/1997 10,000
11,000 Houston, Texas, Water and Sewer System Revenue Bonds, VRDN, Series 22,
3.55% due 12/01/2020 (a) (c) 11,000
72,430 Lower Colorado River Authority, Texas, Revenue Refunding Bonds, VRDN,
3rd Junior Lien, 3.35% due 1/01/2013 (a) (c) 72,430
9,500 Lower Neches Valley Authority, Texas, PCR (Chevron U.S.A. Inc. Project),
3.50% due 8/15/1997 9,500
25,200 Lubbock, Texas, Health Facilities Development Corporation Revenue Bonds
(Saint Joseph Health System), VRDN, Series A, 3.75% due 7/01/2013 (a) 25,200
North Texas Higher Education Authority Incorporated, Student Loan
Revenue Bonds, VRDN, AMT (a) (b) (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) (b):
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) (b):
29,000 3.45% due 6/01/2021 29,000
13,700 3.45% due 6/01/2025 13,700
4,700 Refunding, 3.45% 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, AMT, 3.80% due 4/01/2026 (a) 18,800
10,100 Port of Port Arthur, Texas, Navigational District, PCR, Refunding
(Texaco Inc. Project), VRDN, 3.75% due 10/01/2024 (a) 10,100
15,750 San Antonio, Texas, Electric and Gas Revenue Bonds, CP, Series A, 3.45%
due 5/08/1997 15,750
15,000 San Antonio, Texas, Higher Education Authority, Revenue Refunding Bonds
(Trinity University Project), VRDN, 3.45% due 4/01/2004 (a) 15,000
10,000 San Antonio, Texas, Hotel Occupancy Revenue Bonds, VRDN, 3.50% due
8/15/2019 (a) (f) 10,000
10,000 Texas A&M University, Texas, CP, 3.55% due 5/15/1997 10,000
Texas State, CP:
25,000 3.45% due 5/28/1997 25,000
17,900 3.50% due 6/10/1997 17,900
28,900 Texas State, GO, Refunding (Veterans' Housing Assistance Fund),
VRDN, AMT, 3.35% due 12/01/2016 (a) 28,900
28,400 Texas State, Multi-Modal Water Development Board, VRDN, Series A, 3.80%
due 3/01/2015 (a) 28,400
245,600 Texas State, TRAN, 4.75% due 8/29/1997 246,991
26,885 Travis County, Texas, Health Facility Development Corporation Revenue Bonds
(Daughters of Charity--Seton Medical Center), VRDN, 3.45% due 11/01/2012 (a) 26,885
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Texas $ 21,200 Trinity River Authority, Texas, PCR (Texas Utilities Electric), VRDN, AMT,
(concluded) Series 96A, 3.75% due 3/01/2026 (a) (e) $ 21,200
Waco, Texas, Health Facilities Development Corporation, Health Facilities
Revenue Bonds (Daughters of Charity--Providence Hospital), VRDN (a):
17,800 3.45% due 11/01/2013 17,800
11,900 Series 88A, 3.45% due 11/01/2018 11,900
9,100 West Side Calhoun County, Texas, Development Corporation, PCR (Sohio
Chemical Company Project), UPDATES, 3.70% 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, 3.80%
due 4/01/2031 (a) 4,200
Utah--1.4% 16,900 Emery County, Utah, PCR, Refunding (Pacificorp Projects), VRDN, 3.70%
due 11/01/2024 (a) (e) 16,900
4,550 Salt Lake City, Utah, PCR (Amoco-Standard Oil Project), 3.50% due 10/01/1997 4,541
Salt Lake County, Utah, PCR, Refunding (Service Station Holdings Project),
VRDN (a):
20,700 3.70% due 2/01/2008 20,700
22,300 Series B, 3.70% due 8/01/2007 22,300
15,375 Utah County, Utah, Environmental Improvement Revenue Refunding Bonds
(USX Corp. Project), 3.45% due 8/05/1997 15,375
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--0.4% 1,100 Vermont Educational and Health Buildings Financing Agency Revenue Bonds
(VHA--New England), VRDN, Series G, 3.45% due 12/01/2025 (a) (e) 1,100
29,175 Vermont State Student Assistance Corporation, Student Loan Revenue Bonds,
VRDN, 3.55% due 1/01/2004 (a) 29,175
Virginia--1.1% 8,500 Eagle Tax Exempt Trust, VRDN, Series 95, Class 7091, 3.56%due 1/15/2013 (a) 8,500
14,000 Peninsula Ports Authority, Virginia, Port Facility Revenue Refunding Bonds
(Shell Oil Company Project), UPDATES, Series A, 3.75% due 12/01/2005 (a) 14,000
20,000 Richmond, Virginia, BAN, Series A, 3.50% due 6/30/1997 20,000
Rockingham County, Virginia, IDA, Revenue Bonds:
16,000 (Merck & Co.), Series A, 3.65% due 10/01/2020 16,000
1,000 VRDN, 3.90% due 10/01/2022 (a) 1,000
33,700 Virginia State Housing Development Authority, Commonwealth Mortgage,
Sub-Series H, 3.40% due 7/22/1997 33,684
<PAGE>
Washington-- 16,300 Eagle Tax Exempt Trust, 3.40% due 4/01/1997 16,300
2.3% 30,200 Snohomish County, Washington, Public Utility District No. 001, Electric
Revenue Bonds (Generation System), VRDN, 3.35% due 1/01/2025 (a) (c) 30,200
Washington State Housing Finance Commission, M/F Mortgage Revenue Bonds,
VRDN (a):
6,400 (Arbors on the Park Project), 3.65% due 10/01/2024 6,400
10,600 (Courtside Apartments Project), AMT, 3.55% due 1/01/2026 10,600
Washington State Public Power Supply System Revenue Bonds
(Nuclear Project No. 1), VRDN (a):
18,990 3.60% due 7/01/2004 18,990
6,060 Refunding, Series 1A-1, 3.45% due 7/01/2017 6,060
Washington State Public Power Supply System, Revenue Refunding Bonds
(Nuclear Project No. 3), VRDN (a):
23,365 Series 3A-1, 3.40% due 7/01/2018 23,365
42,785 Series 3A-2, 3.40% due 7/01/2018 42,785
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1997 (CONCLUDED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Washington Washington Student Loan Finance Association Revenue Bonds
(concluded) (Guaranteed Student Loan Program), VRDN (a):
$ 9,700 AMT, Series A, 3.65% due 12/01/2002 $ 9,700
6,000 AMT, Series B, 3.65% due 12/01/2002 6,000
10,680 AMT, Series B, 3.50% due 1/01/2004 10,680
10,400 Second Series, 3.55% due 1/01/2001 10,400
West Virginia-- 11,220 Hancock County, West Virginia, County Commission, IDR, Refunding
0.1% (The Boc Group Inc. Project), VRDN, 3.50% due 8/01/2005 (a) 11,220
Wisconsin--1.1% Eagle Tax Exempt Trust, VRDN, Series 94 (a):
5,500 Class 4901, 3.61% due 9/01/2015 5,500
24,300 Class 4905, 3.61% due 10/01/2005 24,300
6,500 Hartland, Wisconsin, IDR (Commercial Communications Inc.--Hegwood LLC
Project), VRDN, AMT, 3.65% due 8/01/2009 (a) 6,500
19,000 Pleasant Prairie, Wisconsin, PCR, Refunding (Wisconsin Electric & Power Co.),
VRDN, Series C, 3.50% due 9/01/2030 (a) 19,000
16,000 Sheboygan, Wisconsin, PCR, Refunding (Wisconsin Power and Light Company
Project), VRDN, Series A, 3.70% due 9/01/2015 (a) 16,000
14,500 Wisconsin State Health and Educational Facilities Authority Revenue Bonds
(Wheaton Franciscan Services), VRDN, 3.35% due 8/15/2016 (a) 14,500
2,150 Wisconsin State Health Facilities Authority Revenue Bonds (Saint Mary's
Hospital of Milwaukee--Daughters of Charity), VRDN, 3.45% due 11/01/2016 (a) 2,150
<PAGE>
Wyoming--1.3% 18,000 Lincoln County, Wyoming, Environmental Improvement Revenue Bonds
(Pacificorp. Project), VRDN, AMT, 3.90% due 11/01/2025 (a) 18,000
Lincoln County, Wyoming, PCR:
24,800 (Amoco Project--Standard Oil Ltd.), 3.50% due 10/01/1997 24,772
12,400 (Exxon Project), VRDN, AMT, Series A, 3.70% due 7/01/2017 (a) 12,400
9,000 (Exxon Project), VRDN, AMT, Series B, 3.70% due 7/01/2017 (a) 9,000
11,100 Sweetwater County, Wyoming, Environmental Improvement Revenue Refunding
Bonds (Pacificorp Project), VRDN, AMT, 3.90% 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
12,205 Unita County, Wyoming, PCR (Amoco Oil Company Project), Series A,
3.90% due 12/01/1997 12,229
Puerto Rico--2.9% Puerto Rico Commonwealth, Government Development Bank, CP:
45,000 3.40% due 5/01/1997 45,000
45,000 3.40% due 5/02/1997 45,000
18,000 3.35% due 5/05/1997 18,000
15,000 3.40% due 5/06/1997 15,000
20,300 3.40% due 5/07/1997 20,300
20,700 3.20% due 5/09/1997 20,700
76,000 Puerto Rico Commonwealth, TRAN, Series 1997-A, 4% due 7/30/1997 76,141
Total Investments (Cost--$8,398,638*)--100.6% 8,398,638
Liabilities in Excess of Other Assets--(0.6%) (51,360)
----------
Net Assets--100.0% $8,347,278
==========
<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, 1997.
(b)SLMA Collateralized.
(c)MBIA Insured.
(d)FHA Insured.
(e)AMBAC Insured.
(f)FGIC Insured.
(g)Prerefunded.
(h)FSA Insured.
*Cost for Federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 31, 1997
<S> <C> <C>
Assets:
Investments, at value (identified cost--$8,398,637,630) (Note 1a) $ 8,398,637,630
Cash 29,779
Receivables:
Interest $ 49,311,648
Securities sold 3,487,147 52,798,795
---------------
Prepaid registration fees and other assets (Note 1d) 395,016
---------------
Total assets 8,451,861,220
---------------
Liabilities:
Payables:
Securities purchased 98,406,452
Investment adviser (Note 2) 2,766,520
Distributor (Note 2) 2,520,088
Dividends to shareholders (Note 1e) 1,794
Beneficial interest redeemed 662 103,695,516
---------------
Accrued expenses and other liabilities 888,182
---------------
Total liabilities 104,583,698
---------------
Net Assets $ 8,347,277,522
===============
Net Assets Consist of:
Shares of beneficial interest, $0.10 par value, unlimited number of shares
authorized $ 834,975,801
Paid-in capital in excess of par 7,514,540,352
Undistributed investment income--net 19,471
Accumulated realized capital losses--net (Note 4) (2,258,102)
---------------
Net Assets--Equivalent to $1.00 per share based on 8,349,758,013 shares of
beneficial interest outstanding $ 8,347,277,522
===============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1997
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 278,950,355
Expenses:
Investment advisory fees (Note 2) $ 30,793,066
Distribution fees (Note 2) 9,788,070
Transfer agent fees (Note 2) 1,466,306
Registration fees (Note 1d) 512,544
Accounting services (Note 2) 406,090
Custodian fees 216,738
Printing and shareholder reports 145,484
Professional fees 74,331
Trustees' fees and expenses 47,644
Pricing fees 47,021
Other 114,214
---------------
Total expenses 43,611,508
---------------
Investment income--net 235,338,847
Realized Gain on Investments--Net (Note 1c) 2,077,078
---------------
Net Increase in Net Assets Resulting from Operations $ 237,415,925
===============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Year Ended March 31,
Increase (Decrease) in Net Assets: 1997 1996
<S> <C> <C>
Operations:
Investment income--net $ 235,338,847 $ 253,032,458
Realized gain on investments--net 2,077,078 722,425
--------------- ---------------
Net increase in net assets resulting from operations 237,415,925 253,754,883
--------------- ---------------
Dividends to Shareholders (Note 1e):
Investment income--net (235,183,162) (252,865,367)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (235,183,162) (252,865,367)
--------------- ---------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 27,075,188,082 25,775,869,013
Net asset value of shares issued to shareholders in reinvestment of
dividends (Note 1e) 235,179,553 252,865,978
--------------- ---------------
27,310,367,635 26,028,734,991
Cost of shares redeemed (27,129,482,654) (25,257,428,388)
--------------- ---------------
Net increase in net assets derived from beneficial interest
transactions 180,884,981 771,306,603
--------------- ---------------
Net Assets:
Total increase in net assets 183,117,744 772,196,119
Beginning of year 8,164,159,778 7,391,963,659
--------------- ---------------
End of year* $ 8,347,277,522 $ 8,164,159,778
=============== ===============
<FN>
*Undistributed investment income--net (Note 1f) $ 19,471 $ 1,500
=============== ===============
See Notes to Financial Statements.
</TABLE>
<PAGE>
<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: 1997 1996 1995 1994 1993
<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 .03 .02 .02
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.03) (.03) (.03) (.02) (.02)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment Return 2.99% 3.32% 2.76% 1.96% 2.36%
========== ========== ========== ========== ==========
Ratios to Average Net Assets:
Expenses .55% .55% .55% .55% .54%
========== ========== ========== ========== ==========
Investment income--net 2.94% 3.26% 2.70% 1.94% 2.33%
========== ========== ========== ========== ==========
Supplemental Data:
Net assets, end of year (in thousands) $8,347,278 $8,164,160 $7,391,964 $7,911,960 $7,527,054
========== ========== ========== ========== ==========
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.
<PAGE>
(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 shareholders--The Fund declares
dividends daily and reinvests daily such dividends (net of non-
resident alien tax and back-up withholding 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 adjusted to reflect
permanent differences between financial and tax reporting.
Accordingly, current year's permanent book/tax differences of
$137,714 have been reclassified between accumulated net realized
capital losses and undistributed net investment income. 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"). 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, 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, 1997, the Fund had a net capital loss carryforward of
approximately $2,258,000, of which $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. Expired capital loss carry-forward in the amount of $205,513
has been reclassified to paid-in capital in excess of par.
<PAGE>
<AUDIT-REPORT>
CMA TAX-EXEMPT FUND
INDEPENDENT AUDITORS' REPORT
The Board of Trustees and Shareholders,
CMA Tax-Exempt Fund:
We have audited the accompanying statement of assets and
liabilities, including the schedule of investments, of CMA Tax-
Exempt Fund as of March 31, 1997, 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, 1997 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, 1997, 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 9, 1997
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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, 1997 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.