CMA
CMA TAX-EXEMPT FUND
Annual Report
March 31, 1998
MERRILL LYNCH BULL LOGO
Officers and Trustees
Arthur Zeikel--President and Trustee
Ronald W. Forbes--Trustee
Cynthia A. Montgomery--Trustee
Charles C. Reilly--Trustee
Kevin A. Ryan--Trustee
Richard R. West--Trustee
Terry K. Glenn--Executive Vice President
Vincent R. Giordano--Senior Vice President
Donald C. Burke--Vice President
Peter J. Hayes--Vice President
Kenneth A. Jacob--Vice President
Helen Marie Sheehan--Vice President
Gerald M. Richard--Treasurer
Robert Harris--Secretary
Custodian
State Street Bank and Trust Company
P.O. Box 1713
Boston, 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, 1998, CMA Tax-Exempt Fund paid
shareholders a net annualized yield of 3.16%.* As of March 31, 1998,
the Fund's 7-day yield was 3.14%.
Economic Environment and
Investment Strategy
Although short-term taxable interest rates experienced some modest
volatility within a 20 basis point (0.20%) trading range during the
six-month period ended March 31, 1998, they finished the period
virtually unchanged. Economic data released during the period
continued to show a relatively strong economy, while inflation and
wage pressures were virtually non-existent. This scenario presented
a favorable environment for interest rates. Additionally, the flight
to quality in the US financial markets that resulted from the Asian
financial crisis put additional downward pressure on interest rates,
especially for longer maturities. Thus, yields on the three-month US
Treasury bill rose 7 basis points, while yields on the one-year
Treasury bill fell 2 basis points for the same period. In contrast,
interest rates on the 30-year US Treasury bond fell nearly 40 basis
points during the same period, reflecting a flatter yield curve and
reduced inflationary expectations. The Federal Reserve Board
continued to hold interest rates unchanged amid the uncertainty over
the impact of the Asian financial crisis on the US economy.
During the six months ended March 31, 1998, interest rates on short-
term municipal bonds experienced more volatility than their taxable
alternatives, although tax-exempt rates also finished the period
unchanged. Most of this volatility was related to fluctuations in
seasonal supply and demand. This was the case especially at year-
end, when interest rates increased because of redemptions and at the
beginning of the year when interest rates fell dramatically as a
result of strong inflows. New issuance for the period was $21.1
billion, a 42.5% decrease from the $36.7 billion issued in the
previous six-month period. Additionally, assets of the tax-exempt
funds rose nearly $22 billion for the period to approximately $172
billion by March 31, 1998.
[FN]
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
Assets of CMA Tax-Exempt Fund also increased over the six months
ended March 31, 1998 by nearly $1.06 billion, or 12%, to end the
period at approximately $9.4 billion, the highest level ever. During
the course of the Fund's fiscal year, we changed the average
portfolio maturity several times in order to take advantage of
market aberrations. For the first several months of the fiscal year,
we kept the average portfolio maturity relatively short in the 30-
day--40-day range, since the short-term yield curve was flat and
did not offer any yield reward for purchasing longer-term
securities. However, as heavy supply came to market in late summer
1997, we extended the average maturity to the 75-day range as we
expected lower issuance and an unchanged Federal Reserve Board
policy. As supply became scarce and interest rates on long-term
notes fell, we reduced the average portfolio maturity to the 50-day
range by taking profits in those notes purchased in the summer,
especially by the states of California and Texas. Although we
anticipated maintaining a neutral posture for the remainder of the
fiscal year, the large increase in the Fund's net assets diluted the
portfolio's average maturity, causing it to decline into the 40-day
range. We expect to maintain this range in the upcoming months as we
enter a period of redemptions from income tax-related payments and
as issuers begin to conduct their annual cash flow financings. When
the market presents the next heavy new issuance, we believe that,
based upon current market conditions, another maturity extension may
be warranted. Our strategy over the last 12 months served the Fund
well and provided solid performance. As such, the Fund performed
well above the average of similar tax-exempt money market funds as
measured by Lipper Analytical Services.
Looking ahead, we will assess the impact that the amendments to the
Securities and Exchange Commission's Rule 2a-7 might have, both to
the Fund and the market in general. These guidelines governing money
market funds are effective July 1, 1998 and will impose new
diversification requirements on tax-exempt money market funds. We
will also closely monitor developments in the global financial
markets as well as domestic economic data for indications of the
future direction of interest rates. Credit quality and
diversification remain paramount to the Fund as we seek to offer
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
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Peter J. Hayes)
Peter J. Hayes
Vice President and Portfolio Manager
May 8, 1998
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
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
MSTR Municipal Securities Trust Receipts
PCR Pollution Control Revenue Bonds
RAN Revenue Anticipation Notes
S/F Single-Family
TAN Tax Anticipation Notes
TAW Tax Anticipation Warrants
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, 1998 (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Alabama--2.1% $ 67,500 Birmingham, Alabama, Medical Clinic Board Revenue Bonds (U.A.H.S.F.),
VRDN, 3.65% due 12/01/2026 (a) $ 67,500
Columbia, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project),
VRDN (a):
25,000 Series A, 3.70% due 5/01/2022 25,000
21,500 Series E, 3.60% due 10/01/2022 21,500
McIntosh, Alabama, IDB, PCR (Ciba-Geigy Corporation Project),
VRDN (a):
23,600 3.60% due 7/01/2004 23,600
7,600 Series A, 3.70% due 12/01/2003 7,600
5,900 Mobile, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project),
VRDN, 3.70% due 6/01/2015 (a) 5,900
9,680 Montgomery, Alabama, Special Care Facilities Financing Authority,
Health Care Facilities Revenue Bonds (Saint Margaret's Hospital--
Daughters of Charity), VRDN, 3.75% due 11/01/2013 (a) 9,680
20,000 Parrish, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project),
VRDN, 3.70% due 6/01/2015 (a) 20,000
15,000 Stevenson, Alabama, IDB, Environmental Improvement Revenue Bonds
(Mead Corporation Project), VRDN, 3.75% due 1/01/2031 (a) 15,000
Alaska--0.7% 10,400 Alaska Industrial Development and Export Authority Revolving Fund,
VRDN, AMT, Series B, 3.75% due 4/01/2023 (a) 10,400
Valdez, Alaska, Marine Terminal Revenue Bonds (Exxon Pipeline Co.
Project) (a):
27,300 DATES, 3.65% due 10/01/2025 27,300
12,000 Refunding, VRDN, Series A, 3.65% due 12/01/2033 12,000
18,700 Refunding, VRDN, Series B, 3.65% due 12/01/2033 18,700
Arizona--3.1% 26,300 Apache County, Arizona, IDA, IDR (Tucson Electric Power--Springerville
Project), VRDN, Series B, 3.85% due 12/15/2018 (a) 26,300
10,200 Arizona Educational Loan Marketing Corporation Revenue Bonds, VRDN,
AMT, Series A, 3.75% due 3/01/2015 (a)(c) 10,200
6,350 Coconino County, Arizona, Pollution Control Corp. Revenue Bonds
(Arizona Public Service Co.--Navajo Project), VRDN, AMT, Series A, 3.80%
due 10/01/2029 (a) 6,350
7,200 Maricopa County, Arizona, IDA, Hospital Facilities Revenue Bonds
(Samaritan Health Service Hospital), VRDN, Series B-2, 3.65% due
12/01/2008 (a)(c) 7,200
41,500 Maricopa County, Arizona, PCR (El Paso Electic Co. Project), VRDN,
Series A, 3.70% due 7/01/2014 (a) 41,500
Maricopa County, Arizona, PCR, Refunding (Arizona Public Service
Co.), VRDN (a):
16,100 Series A, 3.60% due 5/01/2029 16,100
34,300 Series C, 3.70% due 5/01/2029 34,300
19,700 Series D, 3.65% due 5/01/2029 19,700
15,500 Series F, 3.70% due 5/01/2029 15,500
25,000 Maricopa County, Arizona, PCR, Refunding (El Paso Electric),
VRDN, Series A, 3.70% due 8/01/2015 (a) 25,000
5,000 Maricopa County, Arizona, School District No. 11, TAN, Series C,
4.60% due 6/30/1998 5,010
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Arizona $ 20,785 Phoenix, Arizona, Civic Improvement Corporation Revenue Bonds, VRDN,
(concluded) 3.80% due 7/01/2003 (a) $ 20,785
6,200 Phoenix, Arizona, VRDN, Series 95-2, 3.70% due 6/01/2020 (a) 6,200
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 Bonds, CP:
9,850 3.65% due 5/06/1998 9,850
15,000 3.35% due 5/07/1998 15,000
11,460 3.55% due 7/09/1998 11,460
19,500 3.60% due 7/14/1998 19,500
California--5.4% California Higher Education Loan Authority, Inc., Student Loan
Revenue Bonds (i):
41,425 AMT, Series C, 3.95% due 6/01/1998 41,425
3,250 Refunding, Series B, 4% due 7/01/1998 3,250
33,000 Refunding, VRDN, AMT, Series E-1, 3.80% due 12/01/2022 (a) 33,000
50,000 California Public Capital Improvements Financing Authority Revenue
Bonds (Pooled Loan Project), Series D, 3.60% due 6/15/1998 50,000
290,270 California State, CP, 4.50% due 6/30/1998 290,803
20,000 Los Angeles County, California, Local Education Agency, COP, Pooled
TRAN, Series A, 4.50% due 6/30/1998 (g) 20,034
40,000 Los Angeles County, California, Metropolitan Transportation Authority
Revenue Bonds, Municipal Securities Trust Receipts, VRDN, Series 1,
3.70% due 7/01/2025 (a)(g) 40,000
22,600 Tulane County, California, TRAN, 4.25% due 6/30/1998 22,624
Colorado--1.3% 72,000 Colorado Health Facilities Authority Revenue Bonds (Catholic Health),
VRDN, Series B, 3.70% due 12/01/2025 (a) 72,000
10,500 Denver, Colorado, City and County Airport Revenue Bonds, VRDN, AMT,
Series F, 3.80% due 11/15/2025 (a) 10,500
7,900 Moffat County, Colorado, PCR, Refunding (Pacificorp Projects), VRDN,
3.70% due 5/01/2013 (a)(e) 7,900
14,755 Palomino Park, Colorado, Assessment Lien Revenue Bonds (Public
Improvements Corporation), VRDN, 4% 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
1,500 Series A, 3.70% due 4/01/2016 1,500
8,000 Westminster, Colorado, IDR, Refunding (Ball Corp. Project), VRDN,
3.70% due 6/01/2005 (a) 8,000
Connecticut--0.6% 22,000 Connecticut State Special Assessment, Unemployment Compensation,
Advanced Fund Revenue Bonds (Connecticut Unemployment), Series C,
3.90% due 7/01/1998 (f) 22,000
Eagle Tax-Exempt Trust, Connecticut, VRDN (a):
23,700 3.82% due 11/15/2004 23,700
13,200 Series 94, Class 1803, 3.70% due 8/15/2004 (b) 13,200
Delaware--0.4% 24,000 Delaware State, EDA, IDR, Refunding, VRDN, AMT, Series B (Delaware
Clean Power Project), 3.75% due 8/01/2029 (a) 24,000
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
7,745 Delaware State, GO, Series A, 4.50% due 2/01/1999 7,799
District of District of Columbia, General Fund Recovery Bonds, VRDN, UT (a):
Columbia--1.4% 5,600 Series B-1, 3.65% due 6/01/2003 5,600
17,300 Series B-3, 3.65% due 6/01/2003 17,300
17,100 District of Columbia, Hospital Revenue Bonds (Providence Hospital--
Daughters of Charity), VRDN, Series 89-A, 3.75% due 12/01/2019 (a) 17,100
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
District of District of Columbia, TRAN:
Columbia $ 28,400 Series A, 3.75% due 9/30/1998 $ 28,400
(concluded) 37,000 Series B, 4.50% due 9/30/1998 37,112
26,700 Eagle Tax-Exempt Trust, District of Columbia, VRDN, Series 1994-A,
3.82% due 6/01/2005 (a) 26,700
Florida--3.8% 33,245 Dade County, Florida, Aviation Revenue Refunding Bonds, VRDN, Series V,
3.65% due 10/01/2007 (a) 33,245
66,200 Dade County, Florida, School District, TAN, 4.50% due 6/30/1998 66,313
72,300 Dade County, Florida, Water and Sewer System Revenue Bonds, VRDN, 3.65%
due 10/05/2022 (a)(f) 72,300
23,700 Eagle Tax-Exempt Trust, Florida, VRDN, 3.70% due 7/01/2025 (a) 23,700
14,100 Florida Local Government Finance Authority Revenue Bonds, CP, Series A,
3.70% due 5/08/1998 14,100
24,195 Florida State Municipal Power Agency Revenue Refunding Bonds (Stanton
Project), VRDN, 3.65% due 10/01/2019 (a)(c) 24,195
6,300 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric
Company Project), VRDN, 3.60% due 9/01/2025 (a) 6,300
5,000 Jacksonville, Florida, Revenue Bonds (YMCA Florida First Coast Project),
VRDN, 3.70% due 3/01/2018 (a) 5,000
25,000 Palm Beach County, Florida, School District, TAN, 4.50% due 10/13/1998 25,100
11,100 Saint Lucie County, Florida, PCR, Refunding (Florida Power & Light Co.
Project), VRDN, 3.65% due 1/01/2026 (a) 11,100
4,900 Saint Lucie County, Florida, Solid Waste Disposal Revenue Bonds
(Florida Power & Light Co. Project), VRDN, AMT, 3.80% due 1/01/2027 (a) 4,900
23,500 Sarasota County, Florida, Public Hospital District Revenue Bonds, CP
(Sarasota Memorial Hospital Project), Series A, 3.60% due 4/01/1998 23,500
Sunshine State Governmental Finance Commission, Florida, Revenue Bonds,
CP (e):
7,000 3.55% due 7/10/1998 7,000
17,700 3.60% due 7/10/1998 17,700
15,030 3.55% due 7/13/1998 15,030
6,560 Volusia County, Florida, Health Facilities Authority Revenue Bonds
(Pooled Hospital Loan Program), ACES, 3.70% due 11/01/2015 (a)(f) 6,560
Georgia--5.9% 6,095 Atlanta, Georgia, Airport Facilities Revenue Refunding Bonds, 5.25% due
1/01/1999 (e) 6,169
20,000 Burke County, Georgia, Development Authority, CP, PCR (Oglethorpe Power
Corporation--Plant Vogtle Project), Series A, 3.50% due 7/16/1998 (e) 20,000
Burke County, Georgia, Development Authority, PCR (Georgia Power
Company--Plant Vogtle Project), VRDN (a):
55,300 2nd Series, 3.70% due 4/01/2025 55,300
17,700 3rd Series, 3.70% due 7/01/2024 17,700
15,300 4th Series, 3.60% due 7/01/2024 15,300
14,200 4th Series, 3.65% due 9/01/2025 14,200
35,400 AMT, 3.75% due 9/01/2034 35,400
29,800 Refunding, 3.70% due 9/01/2026 29,800
32,300 Refunding, 1st Series, 3.65% due 4/01/2032 32,300
21,200 Refunding, 3rd Series, 3.70% due 9/01/2025 21,200
41,000 Cobb County, Georgia, TAN, 4% due 12/31/1998 41,148
5,000 Doughterty County, Georgia, School District, TAN, 4% due 12/31/1998 5,015
Eagle Tax-Exempt Trust, Georgia, VRDN (a):
9,500 3.50% due 11/01/2005 9,500
9,500 3.70% due 7/01/2020 9,500
3,290 Resource Finance Authority, 3.85% due 12/01/2016 3,290
8,604 Georgia Municipal Association, Pooled Bonds, COP, VRDN, 3.70% due
12/15/2020 (a)(c) 8,604
Georgia Municipal Gas Authority Revenue Bonds, VRDN (a):
15,000 (Agency Project), Series A, 3.65% due 11/01/2006 15,000
59,750 (Gas Portfolio II Project), Series C, 3.65% due 1/01/2008 59,750
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Georgia $ 15,800 Heard County, Georgia, Development Authority, PCR (Georgia Power Company
(concluded) Project), VRDN, 3.65% due 9/01/2029 (a) $ 15,800
Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax Revenue
Bonds, VRDN (a):
7,005 3.80% due 7/01/2002 7,005
7,340 3.80% due 7/01/2004 7,340
Monroe County, Georgia, Development Authority, PCR (Georgia Power Co.),
VRDN (a):
38,000 1st Series, 3.70% due 7/01/2025 38,000
24,900 2nd Series, 3.60% due 7/01/2025 24,900
5,355 Municipal Electric Authority, Georgia, Refunding (General Resolution
Projects), Sub-Series A, 5% due 1/01/1999 (c) 5,408
Putnam County, Georgia, Development Authority, PCR (Georgia Power
Company Plant Project), VRDN (a):
18,800 1st Series, 3.65% due 6/01/2023 18,800
31,600 2nd Series, 3.70% due 9/01/2029 31,600
Idaho--0.2% 22,600 Idaho Health Facilities Authority Revenue Bonds (Pooled Financing
Program), ACES, 3.60% due 10/01/2010 (a) 22,600
Illinois--8.1% 7,000 Chicago, Illinois, IDR (Enterprise Center VIII Project), VRDN, AMT,
3.95% due 6/01/2022 (a) 7,000
Chicago, Illinois, O'Hare International Airport Revenue Bonds (American
Airlines), DATES (a):
20,200 Series A, 3.70% due 12/01/2017 20,200
25,600 Series B, 3.70% due 12/01/2017 25,600
23,500 Series C, 3.70% due 12/01/2017 23,500
18,200 Series D, 3.70% due 12/01/2017 18,200
6,430 Chicago, Illinois, O'Hare International Airport Revenue Bonds (General
Airport), VRDN, Second Lien, Series B, 3.65% due 1/01/2015 (a) 6,430
14,800 Chicago, Illinois, O'Hare International Airport, Special Facilities
Revenue Bonds (Compagnie Nationale--Air France), VRDN, AMT, 3.80%
due 5/01/2018 (a) 14,800
24,000 Chicago, Illinois, Park District, TAW, 4.75% due 9/21/1998 24,098
16,895 Chicago, Illinois, VRDN, Series B, 3.70% due 1/01/2012 (a) 16,895
Eagle Tax-Exempt Trust, Chicago, Illinois, VRDN (a):
13,800 Series 95, Class 7090, 3.75% due 10/31/2002 13,800
19,000 Series 96C, 3.70% due 1/01/2023 19,000
42,200 Illinois Development Finance Authority, PCR, Refunding (Commonwealth
Edison Company Project), VRDN, Series B, 3.65% due 10/15/2014 (a) 42,200
Illinois Development Finance Authority, Revenue Bonds, VRDN (a):
8,300 (Lyric Opera Chicago Project), 3.70% due 12/01/2028 8,300
6,000 (Olin Corporation Project), Series A, 3.70% due 6/01/2004 6,000
Illinois Educational Facilities Authority Revenue Bonds, VRDN (a):
16,800 (Art Institute of Chicago), 3.75% due 3/01/2027 16,800
5,100 (Chicago Historical Society), 3.70% due 12/01/2025 5,100
26,500 (Illinois Institute of Technology), Series A, 3.70% due 9/01/2025 26,500
20,000 (The Adler Planetarium), 3.70% due 4/01/2031 20,000
Illinois Health Facilities Authority Revenue Bonds, VRDN (a):
6,900 (Central Dupage Healthcorp. Project), 3.70% due 11/01/2020 6,900
29,550 (Franciscan Sisters Health Service), 3.75% due 1/01/2018 29,550
8,400 (Hospital Sisters Services, Inc.), Series E, 3.70% due 12/01/2014 (c) 8,400
41,800 (Northwest Community Hospital), 3.70% due 7/01/2025 41,800
11,400 (Northwestern Memorial Hospital), 3.70% due 8/15/2025 11,400
7,000 (Pooled Financing Program), Series F, 3.65% due 8/01/2015 7,000
84,800 Refunding (Advocate Health Care), Series B, 3.75% due 8/15/2022 84,800
20,000 Refunding (Little Company of Mary Hospital), Series B, 3.80% due
8/15/2021 (c) 20,000
47,400 (Resurrection Health Care System), 3.70% due 5/01/2011 47,400
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Illinois Illinois Health Facilities Authority Revenue Bonds (Evanston Hospital
(concluded) Corporation Project):
$ 22,000 CP, 3.85% due 11/30/1998 $ 22,000
12,000 CP, Series A, 3.90% due 7/31/1998 12,000
12,000 CP, Series A, 3.90% due 10/15/1998 12,000
10,000 Series B, 3.95% due 4/30/1998 10,000
10,000 Series C, 3.95% due 4/30/1998 10,000
10,000 Series D, 3.95% due 4/30/1998 10,000
41,140 Illinois Housing Development Authority Revenue Bonds (Homeowner
Mortgage), AMT, Sub-Series B-2, 4.15% due 7/07/1998 41,140
18,815 Illinois State, GO, VRDN, UT, Series 60, 3.80% due 8/01/2019 (a)(c) 18,815
4,900 Illinois Student Assistance Commission, Student Loan Revenue Bonds, VRDN,
AMT, Series A, 3.75% due 3/01/2006 (a) 4,900
21,350 Regional Transportation Authority, Illinois, VRDN, Series 82, 3.80% due
6/01/2025 (a)(c) 21,350
Southwestern Illinois Development Authority, Solid Waste Disposal
Revenue Bonds (Shell Oil Co.--Wood River Project), VRDN, AMT (a):
11,100 3.75% due 8/01/2021 11,100
10,600 3.75% due 4/01/2022 10,600
Indiana--2.8% 3,200 Elkhardt County, Indiana, Mortgage Revenue Bonds (Hubbard Hill Estates),
VRDN, Series A, 3.65% due 7/01/2027 (a) 3,200
Fort Wayne, Indiana, Hospital Authority Revenue Bonds (Parkview Memorial
Hospital), VRDN (a):
1,645 Series B, 3.70% due 1/01/2016 1,645
2,700 Series B, 3.70% due 1/01/2020 2,700
3,505 Series C, 3.70% due 1/01/2016 3,505
5,670 Series D, 3.70% due 1/01/2016 5,670
5,800 Hammond, Indiana, PCR, Refunding (Amoco Oil Co. Project), VRDN, 3.65%
due 2/01/2022 (a) 5,800
Indiana Bond Bank, Advance Funding Notes:
10,190 Series A-1, 4% due 7/28/1998 10,205
48,500 Series A-2, 4% due 1/20/1999 48,661
Indiana Health Facilities Financing Authority, Hospital Revenue Bonds,
VRDN (a):
10,650 (Capital Access Designated Pool), 3.70% due 1/01/2012 10,650
20,700 (Clarian Health Partners, Inc), Series B, 3.75% due 2/15/2026 20,700
15,000 (Community Hospitals Project), Series A, 3.75% due 7/01/2027 15,000
15,000 Refunding (Charity Obligation Group), Series E, 3.65% due 11/01/2026 15,000
18,200 Refunding (Clarian Health Partners, Inc.), Series A, 3.75% due
2/15/2026 (c) 18,200
Indiana Secondary Market Educational Loans Incorporated, Student Loan
Revenue Bonds, VRDN, AMT, Series B (a)(e):
26,900 3.80% due 12/01/2013 26,900
22,500 3.80% due 12/01/2014 22,500
Jasper County, Indiana, PCR, Refunding (Northern Indiana Public Service
Co.), VRDN (a):
8,000 Series B, 3.70% due 6/01/2013 8,000
11,600 Series C, 3.70% due 4/01/2019 11,600
9,400 Princeton, Indiana, PCR, Refunding (PSI Energy Inc. Project), VRDN, 3.65%
due 4/01/2022 (a) 9,400
9,000 Purdue University, Indiana, University Revenue Bonds (Student Fees),
VRDN, Series O, 3.60% due 7/01/2019 (a) 9,000
Rockport, Indiana, PCR, Refunding (AEP Generating Co. Project), VRDN
(a)(e):
14,200 Series A, 3.70% due 7/01/2025 14,200
800 Series B, 3.70% due 7/01/2025 800
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Iowa--1.8% $ 5,000 Chillicothe, Iowa, PCR, Refunding (Iowa-Illinois Gas & Electric
Project), VRDN, 3.75% due 1/01/2023 (a) $ 5,000
Iowa Finance Authority, Solid Waste Disposal Revenue Bonds (Cedar
River Paper Company Project), VRDN, Series A (a):
66,400 3.80% due 7/01/2023 66,400
42,000 AMT, 3.80% due 6/01/2024 42,000
20,500 AMT, 3.80% due 5/01/2025 20,500
14,500 Iowa Student Loan Liquidity Corporation, Student Loan Revenue Bonds,
VRDN, AMT, Series B, 3.75% due 12/01/2013 (a)(e) 14,500
19,200 Polk County, Iowa, Revenue Bonds (Catholic Health), VRDN, Series B,
3.70% due 12/01/2015 (a) 19,200
Kansas--0.5% 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
38,000 Kansas State, Department of Transportation, Highway Revenue Bonds,
VRDN, Series B, 3.65% due 6/03/1998 (a)(b) 38,000
Kentucky--2.7% 5,100 Ashland, Kentucky, PCR (Calgon Carbon Corporation Project), VRDN,
Series A, 3.90% 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, 3.80% due
11/01/2024 (a) 22,700
Daviess County, Kentucky, Solid Waste Disposal Facilities Revenue Bonds
(Scott Paper Co. Project), VRDN, AMT (a):
29,100 Series A, 3.75% due 12/01/2023 29,100
9,300 Series A, 3.75% due 5/01/2024 9,300
19,800 Series B, 3.75% due 12/01/2023 19,800
21,700 Series B, 3.75% due 5/01/2024 21,700
13,000 Kentucky Asset/Liability Commission, General Fund Revenue Bonds, TRAN,
4.50% due 6/25/1998 13,020
36,400 Kentucky Economic Development Finance Authority Revenue Bonds (Sisters of
Charity), VRDN, 3.70% due 11/01/2020 (a) 36,400
27,421 Kentucky Interlocal School Transportation Association, COP, TRAN, 4.09%
due 6/30/1998 27,425
30,805 Kentucky School Boards Finance Corporation, COP, TRAN, Series A, 4.25%
due 6/30/1998 30,828
38,300 Kentucky State Pollution Abatement and Water Resource Finance Authority,
PCR (Toyota Motors), VRDN, AMT, 4.30% due 8/13/2006 (a) 38,300
Louisiana--1.7% 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, Louisiana State, VRDN, Series 94, Class 3803,
3.82% due 5/01/2008 (a) 8,800
East Baton Rouge Parish, Louisiana, PCR, Refunding (Exxon Project),
VRDN (a):
10,750 3.70% due 11/01/2019 10,750
22,150 3.70% due 3/01/2022 22,150
Louisiana State Offshore Terminal Authority, Deepwater Port Revenue
Refunding Bonds (Loop Inc.--First Stage) (a):
5,100 ACES, 3.65% due 9/01/2006 5,100
14,250 VRDN, Series A, 3.65% due 9/01/2008 14,250
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), 3.60% 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, Port Revenue Refunding Bonds
(Occidental Petroleum Corporation Project), VRDN, 3.75% due 7/01/2018 (a) 4,400
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Maine--0.0% Maine Health and Higher Educational Facilities Authority Revenue Bonds
(VHA New England Inc.), VRDN (a)(e):
$ 1,250 Series B, 3.70% due 12/01/2025 $ 1,250
1,450 Series F, 3.70% due 12/01/2025 1,450
Maryland--0.7% 35,700 Baltimore, Maryland, Port Facilities Revenue Bonds (Occidental Petroleum
Corporation), VRDN, 3.25% due 10/14/2011 (a) 35,700
19,700 Maryland State Health and Higher Educational Facilities Authority Revenue
Bonds (Helix Health Hospital), VRDN, Issue A, 3.65% due 7/01/2026 (a) 19,700
8,200 Washington Suburban Sanitation District, Maryland, BAN, UT, 3.75% due
1/01/1999 8,200
Massachusetts-- 20,900 Eagle Tax-Exempt Trust, Massachusetts, GO, VRDN, Series J, 3.70% due
1.7% 8/01/2005 (a) 20,900
139,250 Massachusetts Bay Transportation Authority, Series B, 4.50% due 9/04/1998 139,609
Michigan--4.7% 17,100 Grand Rapids, Michigan, Water Supply System, Revenue Refunding Bonds, VRDN,
3.60% due 1/01/2020 (a)(f) 17,100
8,460 Holly, Michigan, Area School District, VRDN, UT, Series 50, 3.80% due
5/01/2020 (a)(f) 8,460
58,500 Michigan Municipal Bond Authority Revenue Notes, Series B, 4.50% due
7/02/1998 58,598
237,000 Michigan State Notes, GO, UT, 4.50% due 9/30/1998 237,874
6,150 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds
(Detroit Edison Company), VRDN, Series CC, 3.70% due 9/01/2030 (a) 6,150
17,300 Monroe County, Michigan, Economic Development Corporation, Limited
Obligation Revenue Refunding Bonds (Detroit Edison Co.), VRDN, Series
CC, 3.70% due 10/01/2024 (a) 17,300
Royal Oak, Michigan, Hospital Finance Authority Revenue Bonds (William
Beaumont Hospital), VRDN (a):
10,700 Series J, 3.70% due 1/01/2003 10,700
11,400 Series L, 3.70% due 1/01/2027 11,400
University of Michigan, University Hospital Revenue Bonds, VRDN,
Series A (a):
43,900 3.70% due 12/01/2027 43,900
15,900 (Medical Service Plan), 3.70% due 12/01/2027 15,900
9,800 Refunding, 3.70% due 12/01/2019 9,800
Minnesota--0.5% 45,000 Eagle Tax-Exempt Trust, Minnesota, GO, VRDN, Series A, 3.70% due
11/12/1998 (a) 45,000
Mississippi--0.8% 7,000 Jackson County, Mississippi, Individual Sewer Facilities Revenue
Bonds (Chevron USA, Inc. Project), VRDN, 3.80% due 12/15/2024 (a) 7,000
8,755 Jackson County, Mississippi, PCR, Refunding (Chevron USA, Inc. Project),
VRDN, 3.65% due 12/01/2016 (a) 8,755
26,060 Jackson County, Mississippi, Port Facility Revenue Refunding Bonds
(Chevron USA, Inc. Project), VRDN, 3.70% due 6/01/2023 (a) 26,060
3,000 Mississippi Hospital Equipment and Facilities Authority Revenue Bonds
(Mississippi Baptist Medical Center), VRDN, Series B, 3.65% due
7/01/2012 (a) 3,000
28,400 Perry County, Mississippi, PCR, Refunding (Leaf River Forest Project),
VRDN, 3.65% due 3/01/2002 (a) 28,400
Missouri--0.6% 30,000 Eagle Tax-Exempt Trust, Missouri, VRDN, Series 1993-E, 3.82% due
8/01/2006 (a) 30,000
Missouri Higher Education Loan Authority, Student Loan Revenue Bonds,
VRDN, AMT (a):
7,800 Series A, 3.80% due 6/01/2017 7,800
11,700 Series B, 3.80% due 6/01/2020 11,700
5,000 Missouri State Health and Educational Facilities Authority, Health
Facilities Revenue Bonds (Sisters of Mercy Health System), VRDN,
Series A, 3.65% due 6/01/2019 (a) 5,000
Montana--0.5% 50,000 Montana State, TRAN, 4.50% due 6/30/1998 50,082
Nebraska--0.1% 3,100 Nebraska Higher Education Loan Program, Multiple Mode Student Loan
Revenue Bonds, VRDN, Series C, 3.70% due 12/01/2015 (a)(c) 3,100
3,550 Nebraska Higher Education Loan Program, Student Loan Revenue Bonds, VRDN,
AMT, Series A, 3.80% due 12/01/2016 (a) 3,550
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Nevada--1.2% Clark County, Nevada, Airport Improvement Revenue Bonds:
$ 12,090 (Knudson Project), CP, Series 87-A, 3.70% due 5/07/1998 $ 12,090
95,425 Refunding, VRDN, Series A, 3.65% due 7/01/2012 (a)(c) 95,425
7,075 Nevada Housing Division (Mesquite Bluffs Apartments), VRDN, AMT, Series B,
4.15% due 5/01/2028 (a) 7,075
New Hampshire-- 1,400 New Hampshire Higher Educational and Health Facilities Authority Revenue
0.3% Bonds (VHA New England Inc.), VRDN, Series D, 3.70% due
12/01/2025 (a)(e) 1,400
22,000 New Hampshire State, Business Finance Authority, PCR, Refunding (United
Illuminating Company), VRDN, AMT, Series A, 3.80% due 7/01/2027 (a) 22,000
5,700 New Hampshire State, HFA, M/F Housing Revenue Bonds (P.R.A. Properties--
Pheasant Run Project), VRDN, AMT, 3.75% due 5/01/2025 (a) 5,700
New Jersey-- 15,000 Atlantic City, New Jersey, BAN, UT, 4.25% due 8/27/1998 15,027
0.4% 27,300 Eagle Tax-Exempt, New Jersey, VRDN, 3.70% due 2/15/2007 (a) 27,300
New Mexico-- Farmington, New Mexico, PCR (Arizona Public Service Co.), VRDN (a):
1.0% 22,000 AMT, Series C, 3.80% due 9/01/2024 22,000
25,300 Refunding, Series A, 3.70% due 5/01/2024 25,300
9,200 Refunding, Series B, 3.65% due 9/01/2024 9,200
8,600 Hurley, New Mexico, PCR (Kennecott Santa Fe), VRDN, 3.70% due 12/01/2015 (a) 8,600
32,900 New Mexico State Hospital, Equipment Loan Council Revenue Bonds
(Catholic Health), VRDN, Series B, 3.70% due 12/01/2022 (a) 32,900
New York-- 20,000 Copake Taconic Hills, New York, Century School District, BAN, 4.25% due
5.5% 4/08/1999 20,106
12,000 Floating Rate Trust Certificates, New York City, New York, VRDN,
Series 1992-H, 3.90% due 10/02/1998 (a) 12,000
20,000 Municipal Assistance Corporation, New York City, New York, VRDN, Sub-
Series K-1, 3.50% due 7/01/2008 (a) 20,000
New York City, New York, GO, VRDN, UT (a):
8,400 Series B, Sub-Series B-3, 3.70% due 8/15/2004 (c) 8,400
3,000 Sub-Series A-7, 3.70% due 8/01/2019 3,000
15,000 New York City, New York, Housing Development Corporation, M/F Housing
Rental Revenue Bonds, VRDN, Series A, 3.50% due 11/15/2019 (a)(d) 15,000
New York City, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds, VRDN (a):
21,500 MSTR, Series 27, 3.80% due 6/15/2024 (g) 21,500
17,770 Series 93-C, 3.70% due 6/15/2022 (f) 17,770
38,450 Series A, 3.70% due 6/15/2025 (f) 38,450
25,500 Series C, 3.70% due 6/15/2023 (f) 25,500
32,600 Series G, 3.65% due 6/15/2024 (f) 32,600
92,500 New York City, New York, RAN, UT, Series A, 4.50% due 6/30/1998 92,670
16,100 New York City, New York, VRDN, Series B, Sub-Series B-5, 3.65% due
8/15/2022 (a)(c) 16,100
New York State, Local Government Assistance Corporation, VRDN (a):
19,000 Series 59, 3.70% due 4/01/2019 (e) 19,000
16,300 Series B, 3.45% due 4/01/2025 16,300
55,065 New York State Power Authority, Revenue and General Purpose Bonds
(Junior Lien), 3.60% due 9/01/1998 55,065
13,200 Port Authority of New York and New Jersey, Special Obligation Revenue
Bonds (Versatile Structure Obligation), VRDN, AMT, Series 6, 3.70%
due 12/01/2017 (a) 13,200
40,000 Rochester, New York, BAN, UT, Series IV, 4.25% due 10/29/1998 40,085
49,500 Westchester County, New York, TAN, UT, 3.59% due 12/29/1998 49,506
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
North Carolina-- Craven County, North Carolina, Industrial Facilities and Pollution
0.5% Control Financing Authority (Cravenwood Energy Project), VRDN, AMT (a):
$ 2,800 Series B, 3.75% due 5/01/2011 $ 2,800
3,000 Series C, 3.75% due 5/01/2011 3,000
16,875 North Carolina Medical Care Commission, Health Care Facilities Revenue
Bonds (Cabarrus Memorial Hospital Project), VRDN, 3.60% due 3/01/2012 (a) 16,875
North Carolina Medical Care Commission, Hospital Revenue Bonds, VRDN (a):
9,000 (Carol Woods Project), 3.75% due 4/01/2021 9,000
1,700 (Duke University Hospital), Series B, 3.60% due 6/01/2015 1,700
2,000 (Duke University Hospital), Series C, 3.60% due 6/01/2015 2,000
Raleigh-Durham, North Carolina, Airport Authority, Special Facility
Revenue Refunding Bonds (American Airlines), VRDN (a):
8,300 Series A, 3.70% due 11/01/2015 8,300
2,000 Series B, 3.70% due 11/01/2015 2,000
Ohio--1.4% 12,150 Cuyahoga County, Ohio, Hospital Revenue Refunding Bonds, VRDN, Series
A, 3.70% due 1/01/2016 (a)(e) 12,150
10,500 Eagle Tax-Exempt Trust, Ohio, VRDN, 3.77% due 7/01/2015 (a) 10,500
18,600 Franklin County, Ohio, Hospital Revenue Refunding and Improvement Bonds
(US Health Corp.--Columbus), VRDN, Series A, 3.70% due 12/01/2021 (a) 18,600
25,000 Mahoning County, Ohio, Hospital Facilities Revenue Refunding Bonds, VRDN,
Series A, 3.70% due 12/01/2028 (a)(c) 25,000
32,500 Montgomery County, Ohio, Revenue Refunding Bonds (Miami Valley Hospital),
VRDN, Series A, 3.70% due 11/15/2022 (a) 32,500
1,865 Ohio HFA, M/F Housing Revenue Bonds (Kenwood Congregate Retirement
Program), VRDN, 3.40% due 12/01/2015 (a) 1,865
Ohio State Air Quality Development Authority Revenue Bonds, VRDN,
Series B (a):
13,900 3.70% due 12/01/2015 13,900
8,100 Refunding (Cincinnati Gas & Electric), 3.65% due 9/01/2030 8,100
4,200 Paudling County, Ohio, Solid Waste Disposal Revenue Bonds (Lafarge
Corporation Project), VRDN, AMT, 3.50% due 8/01/2026 (a) 4,200
Oklahoma-- 10,250 Grand River, Oklahoma, Dam Authority Revenue Bonds, VRDN, Series 42,
0.3% 3.80% due 6/01/2009 (a) 10,250
14,200 Muskogee, Oklahoma, Industrial Trust, PCR, Refunding (Oklahoma Gas and
Electric Co.), VRDN, Series A, 3.75% due 1/01/2025 (a) 14,200
Oregon--0.9% 64,000 Multnomah County, Oregon, Portland School District No.1 Bonds, TRAN,
4.25% due 6/26/1998 64,066
18,000 Oregon State, GO, Veterans' Welfare Bonds, VRDN, Series 73-E, 3.60% due
12/01/2016 (a) 18,000
Pennsylvania-- Allegheny County, Pennsylvania, Hospital Development Authority Revenue
3.5% Bonds (Presbyterian Health Center), VRDN (a):
5,000 Series A, 3.70% due 3/01/2020 (c) 5,000
6,300 Series C, 3.70% due 3/01/2020 6,300
33,500 Allegheny County, Pennsylvania, IDA, PCR (Duquesne), CP, Series A, 3.60%
due 1/27/1999 33,500
2,500 Butler County, Pennsylvania, IDA, IDR, Refunding (Wetterau Finance Co.
Project), VRDN, 3.80% due 12/01/2014 (a) 2,500
Delaware County, Pennsylvania, IDA, PCR (a):
5,600 (BP Oil Inc. Project), UPDATES, 3.70% due 12/01/2009 5,600
15,700 Refunding, VRDN, Series A, 3.70% due 8/01/2016 15,700
Eagle Tax-Exempt Trust, Pennsylvania, VRDN (a):
12,300 3.82% due 5/01/2015 12,300
17,000 Series 94, Class 3803, 3.82% due 5/01/2008 17,000
35,000 Emmaus, Pennsylvania, General Authority Revenue Bonds, VRDN, 3.75% due
12/01/2028 (a)(g) 35,000
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Pennsylvania $ 2,600 Geisinger, Pennsylvania, Health Systems Authority Revenue Bonds, VRDN,
(concluded) Series B, 3.70% due 7/01/2022 (a) $ 2,600
12,000 Lackawanna County, Pennsylvania, MSTR, VRDN, Series 38, 3.80% due
9/15/2020 (a) 12,000
1,000 Montgomery County, Pennsylvania, Higher Education and Health Authority,
Hospital Revenue Bonds (Holy Redeemer Hospital), VRDN, 3.65% due
9/01/2018 (a)(e) 1,000
Pennsylvania State Higher Education Assistance Agency, Student Loan
Revenue Bonds, VRDN, AMT (a):
11,200 Series A, 3.80% due 1/01/2018 11,200
5,000 Series B, 3.80% due 7/01/2018 5,000
18,725 Pennsylvania State Higher Educational Facilities Authority, College
and University Revenue Bonds (Temple University), VRDN, 3.65% due
10/01/2009 (a) 18,725
Pennsylvania State Higher Educational Facilities Authority, Revenue
Refunding Bonds (Carnegie Mellon University), VRDN (a):
30,700 Series A, 3.70% due 11/01/2025 30,700
18,600 Series B, 3.70% due 11/01/2027 18,600
15,000 Series C, 3.70% due 11/01/2029 15,000
13,200 Series D, 3.70% due 11/01/2030 13,200
Philadelphia, Pennsylvania, Hospital and Higher Education Facilities
Authority, Hospital Revenue Bonds (Children's Hospital of Philadelphia),
VRDN (a):
7,100 3.70% due 3/01/2027 7,100
42,000 Series A, 3.70% due 3/01/2027 42,000
6,700 Philadelphia, Pennsylvania, IDA, Revenue Bonds (Institute for Cancer
Research Project), VRDN, Series A, 3.70% due 7/01/2013 (a) 6,700
10,400 Philadelphia, Pennsylvania, TRAN, Series A, 4.50% due 6/30/1998 10,412
5,200 Schuylkill County, Pennsylvania, IDA, Resource Recovery Revenue Refunding
Bonds (Northeastern Power Company), VRDN, Series A, 3.60% due 12/01/2022 (a) 5,200
South Carolina-- 15,300 Berkeley County, South Carolina, Industrial Revenue Bonds (Amoco Chemical
1.9% Co. Project), VRDN, AMT, 3.75% due 4/01/2027 (a) 15,300
2,000 Berkeley County, South Carolina, PCR, Refunding (Amoco Chemical Co. Project),
VRDN, 3.65% due 7/01/2012 (a) 2,000
Florence County, South Carolina, Solid Waste Disposal and Wastewater
Treatment Facilities Revenue Bonds (Roche Carolina Inc. Project),
VRDN, AMT (a):
35,000 3.80% due 4/01/2026 35,000
2,900 3.80% due 4/01/2027 2,900
15,000 Greenville County, South Carolina, School District (Enhance Program), UT,
4% due 3/01/1999 15,061
South Carolina Jobs, EDA, Revenue Bonds, VRDN (a):
4,490 (Saint Francis Hospital Project), 3.75% due 7/01/2022 4,490
5,400 (Wellman, Inc. Project), AMT, 3.80% due 12/01/2010 5,400
12,095 (Wellman, Inc. Project), AMT, 3.80% due 12/01/2012 12,095
13,000 South Carolina Jobs, EDA, Solid Waste Recycling Facilities (Santee
River Rubber Project), 3.80% due 4/02/1998 13,000
South Carolina State, Public Service Authority, Electric System Revenue
Bonds, CP:
18,000 3.45% due 5/12/1998 18,000
25,000 3.50% due 7/21/1998 25,000
25,000 3.50% due 7/22/1998 25,000
4,500 South Carolina State, Public Service Authority, Revenue Refunding Bonds,
Series B, 5% due 1/01/1999 (e) 4,547
South Dakota-- 20,000 Lawrence County, South Dakota, Solid Waste Disposal Revenue Bonds
0.2% (Homestake Mining), VRDN, AMT, Series A, 3.75% due 7/01/2032 (a) 20,000
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Tennessee-- $ 14,500 Chattanooga--Hamilton County, Tennessee, Hospital Revenue Refunding Bonds
1.5% (Erlanger Medical Center), VRDN, 3.70% due 10/01/2017 (a) $ 14,500
Clarksville, Tennessee, Public Building Authority Revenue Bonds (Pooled
Financing--Tennessee Municipal Bond Fund), VRDN (a):
16,000 3.70% due 10/01/2025 16,000
25,000 3.70% due 11/01/2027 25,000
9,400 Cleveland, Tennessee, IDB, Revenue Bonds (Newly Wed Foods Incorporated
Project), VRDN, AMT, 3.75% due 1/01/2012 (a) 9,400
8,100 Loudon, Tennessee, IDB, PCR, Refunding (A.E. Staley Manufacturing Co.
Project), VRDN, 3.65% due 9/01/2001 (a) 8,100
13,000 Montgomery County, Tennessee, Public Building Authority Revenue Bonds
(Montgomery County Loan), VRDN, 3.70% due 7/01/2019 (a) 13,000
14,955 Morristown, Tennessee, IDB, PCR, Refunding (Akzo Chemicals, Inc. Project),
VRDN, 3.65% due 8/01/2001 (a) 14,955
26,500 Tennessee State, CP, 3.55% due 7/24/1998 26,500
16,400 Tennessee State, VRDN, Series E, 3.65% due 7/02/2001 (a) 16,400
Texas--20.9% Brazos River Authority, Texas, PCR (Texas Utilities Electric Co.),
VRDN, AMT (a):
15,600 Series A, 3.80% due 4/01/2030 15,600
53,055 Series B, 3.80% due 6/01/2030 53,055
24,005 Series B, 3.75% due 2/01/2032 (c) 24,005
15,800 Series C, 3.80% due 6/01/2030 (e) 15,800
90,555 Series C, 3.80% due 6/01/2030 90,555
24,500 Brazos River Authority, Texas, Revenue Refunding Bonds (Houston Light
and Power Co.), VRDN, AMT, Series 1997, 3.75% due 11/01/2018 (a)(e) 24,500
4,000 Corpus Christi, Texas, IDR (Dedietrich USA Incorporated Project),
VRDN, AMT, 3.85% due 11/01/2008 (a) 4,000
Dallas-Fort Worth, Texas, Regional Airport Revenue Bonds, MSTR, VRDN (a):
15,785 AMT, Series 46, 3.80% due 11/01/2020 (c) 15,785
9,495 AMT, Series 52, 3.80% due 11/01/2017 (c) 9,495
6,600 Series 5, 3.80% due 11/01/2015 6,600
5,300 Grapevine, Texas, Industrial Development Corporation, Airport Revenue
Refunding Bonds (Southern Air Transportation Project), VRDN, 3.75%
due 3/01/2010 (a) 5,300
9,000 Greater East Texas Higher Educational Authority Incorporated, Student Loan
Revenue Refunding Bonds, VRDN, AMT, Series A, 4.10% due 5/01/1998 (a)(i) 9,000
7,300 Gulf Coast, Texas, IDA, Marine Terminal Revenue Bonds (Amoco Oil Co.
Project), VRDN, AMT, 3.75% due 4/01/2028 (a) 7,300
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
7,400 3.80% due 4/01/2026 7,400
13,800 Gulf Coast Waste Disposal Authority, Texas, Environmental Improvement
Revenue Bonds (Amoco Oil Co. Project), VRDN, AMT, 3.75% due 1/01/2026 (a) 13,800
Gulf Coast Waste Disposal Authority, Texas, PCR, VRDN (a):
42,200 AMT (Amoco Oil Co. Project), 3.75% due 5/01/2023 42,200
30,700 AMT (Amoco Oil Co. Project), 3.75% due 6/01/2024 30,700
31,275 Refunding (Amoco Oil Co. Project), 3.65% due 10/01/2017 31,275
14,400 Refunding (Exxon Project), 3.65% due 6/01/2020 14,400
8,000 Gulf Coast, Waste Disposal Authority, Texas, Pollution Control and
Solid Waste Disposal Revenue Refunding Bonds (Amoco Oil Co. Project)
VRDN, AMT, 3.75% due 5/01/2024 (a) 8,000
Gulf Coast Waste Disposal Authority, Texas, Solid Waste Disposal Revenue
Bonds (Amoco Oil Co. Project), VRDN, AMT (a):
37,600 3.75% due 8/01/2023 37,600
32,800 3.75% due 7/01/2027 32,800
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Texas $ 17,710 Harris County, Texas, GO, VRDN, Series 45, 3.80% due 8/15/2016 (a)(f) $ 17,710
(continued) Harris County, Texas, Health Facilities Development Corporation,
Hospital Revenue Bonds, VRDN (a):
11,900 (Memorial Hospital System Project), Series B, 3.65% due 6/01/2024 (c) 11,900
225,050 (Methodist Hospital), 3.70% due 12/01/2025 225,050
88,600 (Methodist Hospital), 3.70% due 12/01/2026 88,600
38,700 (Saint Lukes Episcopal Hospital), Series A, 3.75% due 2/15/2027 38,700
Harris County, Texas, Industrial Development Corporation, PCR (Exxon
Project) (a):
14,600 DATES, Series 1984-A, 3.70% due 3/01/2024 14,600
10,200 DATES, Series 1984-B, 3.70% due 3/01/2024 10,200
8,100 VRDN, AMT, 3.70% due 8/15/2027 8,100
51,250 Harris County, Texas, Industrial Development Corporation, PCR, Refunding
(Shell Oil Company Project), VRDN, 3.65% due 4/01/2027 (a) 51,250
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
Harris County, Texas, Toll Road Revenue Bonds, Sub-Lien, VRDN (a):
31,900 Series B, 3.65% due 8/01/2015 31,900
25,700 Series C, 3.65% due 8/01/2015 25,700
15,000 Series D, 3.65% due 8/01/2015 15,000
25,000 Series H, 3.65% due 8/01/2020 25,000
Hockley County, Texas, Industrial Development Corporation, PCR:
12,000 (Amoco Project), 3.75% due 5/01/1998 12,000
24,200 (Amoco Project--Standard Oil Co.), 3.60% due 9/01/1998 24,200
12,430 Lower Colorado River Authority, Texas, Revenue Refunding Bonds, VRDN,
3rd Junior Lien, 3.65% due 1/01/2013 (a)(c) 12,430
12,000 Lubbock, Texas, Health Facilities Development Corporation Revenue Bonds
(Saint Joseph Health System), VRDN, Series A, 3.65% due 7/01/2013 (a) 12,000
39,600 Matagorda County, Texas, Navigational District No. 1, Revenue Refunding
Bonds (Houston Light & Power Co. Project), VRDN, AMT, Series 1997,
3.75% due 11/01/2028 (a)(e) 39,600
17,600 North Central Texas, Health Facilities Development Corporation Revenue
Bonds (Methodist Hospital, Dallas), VRDN, Series B, 3.70% due
10/01/2015 (a)(h) 17,600
North Texas Higher Education Authority Incorporated, Student Loan Revenue
Bonds, VRDN, AMT (a)(i):
3,000 3.80% due 3/01/1999 3,000
27,900 3.80% due 3/01/2005 27,900
29,000 Series A, 3.80% due 4/01/2005 29,000
5,000 Series A, 3.80% due 4/01/2020 5,000
12,800 Series C, 3.80% due 4/01/2020 (e) 12,800
13,700 Series F, 3.80% due 4/01/2020 (e) 13,700
Panhandle Plains, Texas, Higher Education Authority Incorporated, Student
Loan Revenue Bonds, VRDN, AMT, Series A (a)(i):
9,000 3.75% due 6/01/2021 9,000
13,700 3.75% due 6/01/2025 13,700
4,700 Refunding, 3.75% 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
14,400 Port of Port Arthur, Texas, Navigational District, PCR, Refunding
(Texaco Inc. Project), VRDN, 3.70% due 10/01/2024 (a) 14,400
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Texas Sabine River Authority, Texas, PCR, VRDN (a)(e):
(concluded) $ 5,000 Refunding (Texas Utilities Project), Series A, 3.70% due 3/01/2026 $ 5,000
8,100 (Texas Utilities Electric Co. Project), AMT, 3.75% due 3/01/2026 8,100
15,000 San Antonio, Texas, Higher Education Authority, Revenue Refunding Bonds
(Trinity University Project), VRDN, 3.70% due 4/01/2004 (a) 15,000
10,000 San Antonio, Texas, Hotel Occupancy Revenue Bonds, VRDN, Series 51,
3.80% due 8/15/2019 (a)(f) 10,000
52,200 South Texas Higher Education Authority Incorporated, Student Loan Revenue
Refunding Bonds, VRDN, AMT, 3.75% due 12/01/2027 (a)(c)(i) 52,200
16,850 Southwest Texas, Higher Education Authority Incorporated, Revenue Refunding
Bonds (Southern Methodist University), VRDN, 3.70% due 7/01/2015 (a) 16,850
10,000 Texas State, CP, Series 1993-A, 3.55% due 7/27/1998 10,000
36,500 Texas State, GO, Refunding (Veterans' Housing Assistance Fund), VRDN,
AMT, 3.65% due 12/01/2016 (a) 36,500
28,400 Texas State, Multi-Modal Water Development Board, VRDN, Series A, 3.70%
due 3/01/2015 (a) 28,400
7,150 Texas State, Public Financial Authority, Revenue Refunding Bonds,
4% due 10/01/1998 7,158
306,400 Texas State, TRAN, Series A, 4.75% due 8/31/1998 307,724
22,770 Texas State Tender Options, VRDN, 3.80% due 10/01/2008 (a) 22,770
21,200 Trinity River Authority, Texas, PCR (Texas Utilities Electric), VRDN, AMT,
Series 96A, 3.80% due 3/01/2026 (a)(e) 21,200
20,300 West Side Calhoun County, Texas, Development Corporation, PCR (Sohio
Chemical Company Project--Standard Oil Co.), UPDATES, 3.70% due
12/01/2015 (a) 20,300
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--2.6% 11,500 Davis County, Utah, School District, TAN, 4.50% due 6/30/1998 11,517
39,900 Emery County, Utah, PCR, Refunding (Pacificorp Projects), VRDN, 3.70%
due 11/01/2024 (a)(e) 39,900
Intermountain Power Agency, Utah, Power Supply Revenue Bonds:
25,000 CP, 3.50% due 7/08/1998 25,000
12,000 Series E, 3.45% due 9/15/1998 (e) 12,000
12,725 VRDN, 3.80% due 7/01/2006 (a) 12,725
6,180 Jordan, Utah, School District, Tender Option, VRDN, UT, 3.85% due
6/15/2007 (a) 6,180
Salt Lake County, Utah, PCR, Refunding (Service Station Holdings Project),
VRDN (a):
30,600 3.70% due 2/01/2008 30,600
31,205 Series B, 3.70% due 8/01/2007 31,205
15,375 Utah County, Utah, Environmental Improvement Revenue Refunding Bonds
(USX Corp. Project), 3.60% due 6/15/1998 15,375
Utah State Board of Regents, Student Loan Revenue Bonds, VRDN, AMT
(a)(e):
6,000 Series C, 3.80% due 11/01/2013 6,000
33,500 Series L, 3.80% due 11/01/2025 33,500
Utah State, HFA, S/F Mortgage, VRDN (a):
6,600 Series 1, 3.75% due 7/01/2016 6,600
12,450 Series 4, 3.80% due 7/01/2028 12,450
Vermont-- 1,100 Vermont Educational and Health Buildings Financing Agency Revenue Bonds
0.3% (VHA--New England), VRDN, Series G, 3.70% due 12/01/2025 (a)(e) 1,100
27,575 Vermont State Student Assistance Corporation, Student Loan Revenue Bonds,
VRDN, 3.40% due 1/01/2004 (a) 27,575
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Virginia-- $ 8,500 Eagle Tax-Exempt Trust, Virginia, VRDN, Series 95, Class 7091, 3.77% due
1.6% 1/15/2013 (a) $ 8,500
Norfolk, Virginia, IDA, CP, Revenue Bonds (Sentara Hospital--Norfolk
Project), Series A:
25,000 3.55% due 7/20/1998 25,000
12,900 3.55% due 7/23/1998 12,900
24,500 Roanoke, Virginia, IDA, Hospital Revenue Bonds (Carilion Health Systems),
VRDN, Series A, 3.70% due 7/01/2027 (a) 24,500
Rockingham County, Virginia, IDA, Revenue Bonds, VRDN (a):
1,000 4.15% due 10/01/2022 1,000
16,000 (Merck & Co.), Series A, 3.90% due 10/01/2020 16,000
Virginia State, HDA, Commonwealth Mortgage:
24,800 AMT, Series G, Sub-Series G, 3.92% due 4/16/1998 24,800
33,700 Series H, Sub-Series H, 3.84% due 4/16/1998 33,700
Washington-- 16,300 Eagle Tax-Exempt Trust, Washington State, GO, VRDN, 3.70% due 4/01/2011 (a) 16,300
1.6% 30,200 Snohomish County, Washington, Public Utility District No. 001, Electric
Revenue Bonds (Generation System), VRDN, 3.65% 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), 3.95% due 10/01/2024 6,400
10,600 (Courtside Apartments Project), AMT, 3.80% due 1/01/2026 10,600
Washington State Public Power Supply System Revenue Bonds (Nuclear Project
No. 1), VRDN (a):
18,990 3.85% due 7/01/2004 18,990
5,870 Refunding, Series 1A-1, 3.65% due 7/01/2017 5,870
24,170 Refunding, Series 1A-2, 3.625% due 7/01/2017 24,170
20,000 Washington State Public Power Supply System, Revenue Refunding Bonds
(Nuclear Project No. 3), VRDN, Series 3A-1, 3.625% due 7/01/2018 (a) 20,000
10,680 Washington Student Loan Finance Association Revenue Bonds (Guaranteed
Student Loan Program), VRDN, AMT, Series B, 3.60% due 1/01/2004 (a) 10,680
9,200 Yakima County, Washington, Revenue Bonds (Macro Plastics Inc. Project),
VRDN, AMT, 3.85% due 12/01/2026 (a) 9,200
West Virginia-- 11,220 Hancock County, West Virginia, County Commission, IDR, Refunding (The
0.2% Boc Group, Inc. Project), VRDN, 3.65% due 8/01/2005 (a) 11,220
7,600 Marshall County, West Virginia, PCR (Mountaineer Carbon Co.--BP Oil),
UPDATES, 3.70% due 12/01/2020 (a) 7,600
Wisconsin-- 4,800 Eagle Tax-Exempt Trust, Wisconsin, Housing and Economy Development Bonds,
1.4% VRDN, Series 94, Class 4901, 3.82% due 9/01/2015 (a) 4,800
6,500 Hartland, Wisconsin, IDR (Commercial Communications Inc.--Hegwood LLC
Project), VRDN, AMT, 3.85% due 8/01/2009 (a) 6,500
4,650 Langlade County, Wisconsin, BAN, 3.95% due 3/01/1999 4,657
35,000 Milwaukee, Wisconsin, Revenue Bonds (School Order Notes), Series B,
4.25% due 8/27/1998 35,062
19,000 Pleasant Prairie, Wisconsin, PCR, Refunding (Wisconsin Electric & Power
Co.), VRDN, Series C, 3.75% 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
9,125 Waupun, Wisconsin, School District, BAN, 4.35% due 12/01/1998 9,146
7,400 Wisconsin State, GO, 4.50% due 6/15/1998 7,411
14,500 Wisconsin State Health and Educational Facilities Authority Revenue Bonds
(Wheaton Franciscan Services), VRDN, 3.70% due 8/15/2016 (a) 14,500
10,077 Wisconsin State Student Loan Revenue Bonds, CP, Series A, 3.45% due
5/04/1998 10,077
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF MARCH 31, 1998 (CONCLUDED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Wyoming-- Lincoln County, Wyoming, PCR, VRDN (a):
1.5% $ 7,700 (Exxon Project), AMT, Series A, 3.80% due 7/01/2017 $ 7,700
9,000 (Exxon Project), AMT, Series B, 3.80% due 7/01/2017 9,000
10,960 (Pacificorp Projects), 3.80% due 11/01/2024 (e) 10,960
Sublette County, Wyoming, PCR (Exxon Project) (a):
10,200 VRDN, AMT, Series B, 3.75% due 7/01/2017 10,200
17,150 DATES, 3.65% due 11/01/2014 17,150
Sweetwater County, Wyoming, PCR, Refunding (Pacificorp Project), VRDN
(a):
18,000 3.75% due 7/01/2015 18,000
12,000 3.80% due 11/01/2024 (e) 12,000
13,900 Sweetwater County, Wyoming, PCR, VRDN (Idaho Power Co. Project), Series
C, 3.70% due 7/15/2026 (a) 13,900
Uinta County, Wyoming, PCR:
15,000 (Amoco--Standard Oil Company Industry), Series A, 3.85% due 12/01/1998 15,000
15,100 Refunding (Chevron USA Inc. Project), VRDN, 3.65% due 8/15/2020 (a) 15,100
8,100 Refunding (Chevron USA Inc. Project), VRDN, 3.65% due 12/01/2022 (a) 8,100
Total Investments (Cost--$9,435,976*)--100.8% 9,435,976
Liabilities in Excess of Other Assets--(0.8%) (79,271)
----------
Net Assets--100.0% $9,356,705
==========
<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, 1998.
(b)Prerefunded.
(c)MBIA Insured.
See Notes to Financial Statements.
(d)FNMA Collateralized.
(e)AMBAC Insured.
(f)FGIC Insured.
(g)FSA Insured.
(h)BIG Insured.
(i)SLMA Collateralized.
*Cost for Federal income tax purposes.
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF MARCH 31, 1998
<S> <C> <C>
Assets:
Investments, at value (identified cost--$9,435,976,145) (Note 1a) $ 9,435,976,145
Cash 98,207
Interest receivable 73,925,342
Prepaid registration fees and other assets (Note 1d) 708,318
---------------
Total assets 9,510,708,012
---------------
Liabilities:
Payables:
Securities purchased $ 147,244,022
Investment adviser (Note 2) 3,181,361
Distributor (Note 2) 2,745,270
Beneficial interest redeemed 847 153,171,500
---------------
Accrued expenses and other liabilities 831,283
---------------
Total liabilities 154,002,783
---------------
Net Assets $ 9,356,705,229
===============
Net Assets Consist of:
Shares of beneficial interest, $0.10 par value, unlimited number of shares
authorized $ 935,857,007
Paid-in capital in excess of par 8,421,748,286
Accumulated realized capital losses--net (Note 4) (900,064)
---------------
Net Assets--Equivalent to $1.00 per share based on 9,358,570,066 shares of
beneficial interest outstanding $ 9,356,705,229
===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENT OF OPERATIONS FOR THE YEAR ENDED MARCH 31, 1998
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 312,934,176
Expenses:
Investment advisory fees (Note 2) $ 32,978,418
Distribution fees (Note 2) 10,594,071
Transfer agent fees (Note 2) 1,465,966
Registration fees (Note 1d) 759,338
Accounting services (Note 2) 441,217
Custodian fees 240,597
Printing and shareholder reports 117,084
Professional fees 69,623
Pricing fees 54,430
Trustees' fees and expenses 43,134
Other 73,056
---------------
Total expenses 46,836,934
---------------
Investment income--net 266,097,242
Realized Gain on Investments--Net (Note 1c) 544,094
---------------
Net Increase in Net Assets Resulting from Operations $ 266,641,336
===============
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: 1998 1997
<S> <C> <C>
Operations:
Investment income--net $ 266,097,242 $ 235,338,847
Realized gain on investments--net 544,094 2,077,078
--------------- ---------------
Net increase in net assets resulting from operations 266,641,336 237,415,925
--------------- ---------------
Dividends to Shareholders (Note 1e):
Investment income--net (266,025,682) (235,183,162)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (266,025,682) (235,183,162)
--------------- ---------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 31,377,164,577 27,075,188,082
Net asset value of shares issued to shareholders in reinvestment of
dividends (Note 1e) 266,028,068 235,179,553
--------------- ---------------
31,643,192,645 27,310,367,635
Cost of shares redeemed (30,634,380,592) (27,129,482,654)
--------------- ---------------
Net increase in net assets derived from beneficial interest
transactions 1,008,812,053 180,884,981
--------------- ---------------
Net Assets:
Total increase in net assets 1,009,427,707 183,117,744
Beginning of year 8,347,277,522 8,164,159,778
--------------- ---------------
End of year* $ 9,356,705,229 $ 8,347,277,522
=============== ===============
<FN>
*Undistributed investment income--net (Note 1f) -- $ 19,471
=============== ===============
See Notes to Financial Statements.
</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: 1998 1997 1996 1995 1994
<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 .03 .02
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.03) (.03) (.03) (.03) (.02)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment Return 3.16% 3.00% 3.31% 2.76% 1.96%
========== ========== ========== ========== ==========
Ratios to Average Net Assets:
Expenses .55% .55% .55% .55% .55%
========== ========== ========== ========== ==========
Investment income--net 3.11% 2.94% 3.26% 2.70% 1.94%
========== ========== ========== ========== ==========
Supplemental Data:
Net assets, end of year (in thousands) $9,356,705 $8,347,278 $8,164,160 $7,391,964 $7,911,960
========== ========== ========== ========== ==========
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.
(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
$91,031 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.
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, 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, 1998, the Fund had a net capital loss carryforward of
approximately $900,000, of which $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
carryforward in the amount of $722,913 has been reclassified to paid-
in capital in excess of par.
<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, 1998, 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, 1998 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, 1998, 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 8, 1998
</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, 1998 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.
