CMA
CMA TAX-EXEMPT FUND
Semi-Annual Report
September 30, 1998
MERILL LYNCH BULL LOGO
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. Past
performance results shown in this report should not be considered a
representation of future performance, which will fluctuate. An
investment in the Fund is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other Government agency.
Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the
Fund. 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 six-month period ended September 30, 1998, CMA Tax-Exempt
Fund paid shareholders a net annualized yield of 3.08%*. As of
September 30, 1998, the Fund's 7-day yield was 3.40%.
Investment Outlook
Short-term interest rates fell dramatically during the six-month
period ended September 30, 1998. Interest rates on one-year US
Treasury bills fell approximately 100 basis points (1.00%) during
the six-month period as investors sought the safety of securities
backed by the US Government in the global financial turmoil.
Economic data released during the period continued to indicate
benign inflationary conditions and a domestic economy that continued
to grow despite deteriorating conditions in other parts of the
world. However, investors began to fear that the global recession
would eventually begin to affect the health of the US economy and
force the Federal Reserve Board to ease monetary policy. Investors
began to drive down bond yields in anticipation of a weaker economy,
and the sharp drop in the stock market further exacerbated the fall
in interest rates. Additionally, shortly before the end of the
period, the Federal Reserve Board lowered short-term interest rates
25 basis points in the hope of heading off any economic slowdown in
the United States. This was followed by another 25 basis point cut
in short-term interest rates in October, which investors viewed
positively.
[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 also fell on short-term tax-exempt securities,
although not to the degree that they fell on Treasury bills. Short-
term municipal bonds did not benefit from the flight to quality as
US Government issues did, although interest rates were affected by
the flow of cash into the short-term end of the market, especially
money market funds. Short-term municipal interest rates were
volatile during the period as they reacted to fluctuations in supply
and demand. For instance, interest rates rose in April as tax-exempt
money funds experienced investor redemptions from tax payments.
However, interest rates fell in July and August in response to
increased demand for short-term products. Although interest rates on
variable rate demand notes rose during the month of September as
dealers sought to avoid the high cost of carrying inventory over
quarter-end, interest rates on longer-term notes actually fell as
new issues were met with favorable investor response.
New-issue supply for the six-month period rose approximately $3.1
billion, or 15%, from the $21 billion issued during the previous six-
month period. Assets of the tax-exempt money fund industry rose
approximately $3.2 billion over the period, although they were quite
volatile during this time. Assets fell dramatically in April as
investors liquidated money market fund shares to pay their annual
tax bills. However, assets rose throughout July and August as cash
flowed into the money funds from dividends, maturities and as a safe
haven from the falling equity markets. Assets of the tax-exempt
money fund industry ended the period at approximately $175 billion,
an increase from the $172 billion at the outset of the quarter, but
below their all-time high of nearly $180 billion.
Investment Strategy
During the six-month period ended September 30, 1998, we maintained
the average portfolio maturity of CMA Tax-Exempt Fund in the
35-day--50-day range. For most of the period, the short-term tax-
exempt yield curve was flat to inverted. This means that the
interest rates on shorter-term variable rate products equaled or
exceeded those of tax-exempt notes and commercial paper.
The main reason for the shape of the yield curve was the large
volume of structured issues created by the broker-dealer community.
Such securities are created from high-quality, longer-term municipal
bonds or notes and resecuritized into money market instruments that
have a put back to a bank or other financial institution. The large
volume of these securities created during the last six months has
kept upward pressure on short-term interest rates, while the demand
for longer-term paper has forced these interest rates down, thus
producing a flat or inverted yield curve. In such an environment,
there is no yield reward for extending maturity. At certain times
during the period, the Fund's average portfolio maturity approached
50 days as we purchased new issues, most notably the $250 million
state of Texas tax and revenue anticipation notes in late August as
well as several state and local financings which sold in June. This
strategy enhanced the Fund's performance during the six-month period
ended September 30, 1998 as it continued to outperform the average
total return of similar tax-exempt funds, according to Lipper
Analytical Services.
The amendments to SEC Rule 2a-7, which govern money market funds,
became effective in July. While diversification rules were
tightened, CMA Tax-Exempt Fund has been well diversified and thus
the new rules have had little impact on the Fund. We will continue
to monitor global financial events as well as domestic economic data
to attempt to gauge the future direction of interest rates and
Federal Reserve Board policy. Credit quality and diversification
remain paramount to the Fund as we seek to offer shareholders an
attractive tax-exempt 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
November 9, 1998
Portfolio Abbreviations for CMA Tax-Exempt Fund
ACES SM Adjustable Convertible Extendible 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
MSTR Municipal Securities Trust Receipts
PCR Pollution Control Revenue Bonds
S/F Single-Family
TAN Tax Anticipation Notes
TAW Tax Anticipation Warrants
TRAN Tax Revenue Anticipation Notes
UPDATES Unit Price Adjustable Tax-Exempt Securities
UT Unlimited Tax
VRDN Variable Rate Demand Revenue Bonds
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Alabama-- $ 67,500 Birmingham, Alabama, Medical Clinic Board Revenue Bonds (U.A.H.S.F.), VRDN,
2.6% 4% due 12/01/2026 (a) $ 67,500
Columbia, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project),
VRDN (a):
25,000 Series A, 4.15% due 5/01/2022 25,000
10,300 Series C, 4.15% due 10/01/2022 10,300
24,300 Series E, 4.05% due 10/01/2022 24,300
7,600 McIntosh, Alabama, IDB, PCR (Ciba Corporation Project), VRDN, Series A,
3.95% due 12/01/2003 (a) 7,600
8,600 Mobile, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project), VRDN,
4.15% due 6/01/2015 (a) 8,600
9,680 Montgomery, Alabama, Special Care Facilities Financing Authority, Health Care
Facilities Revenue Bonds (Saint Margaret's Hospital), VRDN, 4.10% due
11/01/2013 (a) 9,680
25,050 Parrish, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project), VRDN,
4.15% due 6/01/2015 (a) 25,050
24,000 Stevenson, Alabama, IDB, Environmental Improvement Revenue Bonds (Mead
Corporation Project), VRDN, 4.25% due 1/01/2031 (a) 24,000
38,900 West Jefferson, Alabama, IDB, PCR, Refunding (Alabama Power Co. Project),
VRDN, 4.20% due 6/01/2028 (a) 38,900
Alaska--0.9% Valdez, Alaska, Marine Terminal Revenue Bonds (Exxon Pipeline Co. Project) (a):
27,300 DATES, 4.10% due 10/01/2025 27,300
11,700 Refunding, VRDN, Series A, 4.05% due 12/01/2033 11,700
24,600 Refunding, VRDN, Series B, 4.05% due 12/01/2033 24,600
17,600 Refunding, VRDN, Series C, 4.05% due 12/01/2033 17,600
Arizona-- 26,300 Apache County, Arizona, IDA, IDR (Tucson Electric Power--Springerville
3.1% Project), VRDN, Series B, 4.10% due 12/15/2018 (a) 26,300
10,200 Arizona Educational Loan Marketing Corporation Revenue Bonds, VRDN, AMT,
Series A, 4.10% due 3/01/2015 (a)(c) 10,200
6,350 Coconino County, Arizona, PCR (Arizona Public Service Co.--Navajo Project),
VRDN, AMT, Series A, 4.15% due 10/01/2029 (a) 6,350
15,500 Maricopa County, Arizona, IDA, Hospital Facilities Revenue Bonds (Samaritan
Health Service Hospital), VRDN, Series B-2, 4.10% due 12/01/2008 (a)(c) 15,500
Maricopa County, Arizona, Pollution Control Corporation, PCR (El Paso Electric
Co. Project), VRDN, Series A (a):
41,500 4.10% due 7/01/2014 41,500
25,000 Refunding, 4.10% due 8/01/2015 25,000
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Arizona Maricopa County, Arizona, Pollution Control Corporation, PCR, Refunding
(concluded) (Arizona Public Service Co.), VRDN (a):
$ 26,200 Series A, 4.05% due 5/01/2029 $ 26,200
27,950 Series C, 4.15% due 5/01/2029 27,950
19,700 Series D, 4.15% due 5/01/2029 19,700
20,785 Phoenix, Arizona, Civic Improvement Corporation, Wastewater System Lease
Revenue Bonds, VRDN, 4.15% due 7/01/2023 (a) 20,785
7,000 Pinal County, Arizona, IDA, PCR (Magma Copper/Newmont Mining Corp.),
VRDN, 4.15% due 12/01/2009 (a) 7,000
Salt River Project, Arizona, Agricultural Improvement and Power District,
Electric System Revenue Bonds, CP:
11,460 3.50% due 10/07/1998 11,460
23,900 3.55% due 11/10/1998 23,900
12,000 3.55% due 11/12/1998 12,000
8,900 Tempe, Arizona, Excise Tax Revenue Bonds, VRDN, 4.15% due 7/01/2023 (a) 8,900
Arkansas-- Arkansas State Development Finance Authority, S/F Mortgage Revenue Bonds
0.1% (Mortgage-Backed Securities Program), AMT:
3,230 Series D, 3.70% due 7/01/1999 3,230
3,495 UT, Series B, 3.75% due 7/01/1999 (f) 3,495
California-- California Higher Education Loan Authority, Inc., Student Loan Revenue Bonds:
2.0% 41,425 AMT, Series C, 3.75% due 6/01/1999 (h) 41,425
33,000 Refunding, VRDN, AMT, Series E-1, 4.05% due 12/01/2022 (a)(h) 33,000
21,500 Refunding, VRDN, Series A, 3.80% due 5/01/1999 (a) 21,500
50,000 California Public Capital Improvements Financing Authority Revenue Bonds
(Pooled Loan Project), Series D, 3.45% due 12/15/1998 50,000
40,000 Los Angeles County, California, Metropolitan Transportation Authority Revenue
Bonds, Municipal Trust Receipts, VRDN, Series SGB-1, 3.97% due 7/01/2025 (a)(g) 40,000
Colorado-- 80,800 Colorado Health Facilities Authority Revenue Bonds (Catholic Health), VRDN,
1.7% Series B, 3.90% due 12/01/2025 (a) 80,800
10,500 Denver, Colorado, City and County Airport Revenue Bonds, VRDN, AMT,
Series F, 4.10% due 11/15/2025 (a) 10,500
14,705 Moffat County, Colorado, PCR, Refunding (Pacificorp Projects), VRDN, 4.15%
due 5/01/2013 (a)(e) 14,705
14,610 Municipal Securities Trusts Certificate, Colorado, Public Highway Authority
Revenue Bonds, Series 54, Class A, 3.80% due 8/01/2005 (a)(c) 14,610
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, 4.25% due 4/01/2014 6,500
5,010 Series A, 4.10% due 4/01/2016 5,010
8,000 Westminster, Colorado, IDR, Refunding (Ball Corp. Project), VRDN, 4% due
6/01/2005 (a) 8,000
Connecticut-- 3,560 Connecticut State, GO, Tender Option Certificates, 4.15% due 5/01/2005 (a) 3,560
0.7% 22,000 Connecticut State Special Assessment, Unemployment Compensation,
Advanced Fund Revenue Bonds (Connecticut Unemployment), Series C, 3.60%
due 7/01/1999 (f) 22,000
Eagle Tax-Exempt Trust, Connecticut, VRDN (a):
13,200 Series 1994, Class 0701, 3.70% due 8/15/2012 13,200
23,700 Series 1996, Class 0701, 4.12% due 11/15/2004 23,700
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Delaware-- $ 34,000 Delaware State, EDA, IDR, Refunding (Delaware Clean Power Project), VRDN,
0.5% AMT, Series B, 4.10% due 8/01/2029 (a) $ 34,000
7,745 Delaware State, GO, Series A, 4.50% due 2/01/1999 7,767
District of District of Columbia, General Fund Recovery Bonds, VRDN, UT (a):
Columbia-- 11,980 Series B-1, 4.25% due 6/01/2003 11,980
0.8% 14,800 Series B-3, 4.25% due 6/01/2003 14,800
17,100 District of Columbia, Hospital Revenue Bonds (Providence Hospital), VRDN,
Series 89-A, 4.10% due 12/01/2019 (a) 17,100
26,700 Eagle Tax-Exempt Trust, Washington D.C., District of Columbia, GO, VRDN,
Series 1994-A, 4.12% due 6/01/2005 (a) 26,700
Florida-- 12,000 Capital Projects Finance Authority Revenue Bonds, Florida (Florida Hospital
2.1% Association--Capital Projects Loan), VRDN, Series A, 4% due 6/01/2028 (a)(g) 12,000
44,300 Dade County, Florida, Water and Sewer System Revenue Bonds, VRDN, 4% due
10/05/2022 (a)(f) 44,300
24,750 Eagle Tax-Exempt Trust, Florida, VRDN, Series 1996-C, 3.60% due 7/01/2025 (a) 24,750
24,195 Florida State Municipal Power Agency, Revenue Refunding Bonds (Stanton
Project), VRDN, 3.90% due 10/01/2019 (a)(c) 24,195
6,050 Greater Orlando Aviation Authority, Florida, Orlando Airport Facilities Revenue
Bonds, VRDN, AMT, Series A-51, 4.40% due 10/01/2023 (a) 6,050
10,000 Jacksonville, Florida, PCR, Refunding (Florida Power & Light Co. Project),
VRDN, 4.10% due 5/01/2029 (a) 10,000
5,000 Jacksonville, Florida, Revenue Bonds (YMCA Florida First Coast Project), VRDN,
3.95% due 3/01/2018 (a) 5,000
25,000 Palm Beach County, Florida, School District, TAN, 4.50% due 10/13/1998 25,007
18,900 Saint Lucie County, Florida, PCR, Refunding (Florida Power & Light Co. Project),
VRDN, 4.05% due 1/01/2026 (a) 18,900
4,900 Saint Lucie County, Florida, Solid Waste Disposal Revenue Bonds (Florida
Light & Power Co. Project), VRDN, AMT, 4.25% due 1/01/2027 (a) 4,900
7,000 Sunshine State Governmental Financing Commission, Florida, Revenue Bonds,
CP, Series B, 3.60% due 10/08/1998 7,000
6,560 Volusia County, Florida, Health Facilities Authority Revenue Bonds (Pooled
Hospital Loan Program), ACES, 3.92% due 11/01/2015 (a)(f) 6,560
Georgia-- 6,095 Atlanta, Georgia, Airport Facilities Revenue Refunding Bonds, 5.25% due
4.6% 1/01/1999 (e) 6,120
Bartow County, Georgia, Development Authority, PCR (Georgia Power
Company Plant--Bowen Project), VRDN (a):
6,800 1st Series, 4.10% due 6/01/2023 6,800
26,200 Refunding, 4.15% due 3/01/2024 26,200
Burke County, Georgia, Development Authority, PCR (Georgia Power
Company--Plant Vogtle Project), VRDN (a):
17,700 4.10% due 7/01/2024 17,700
22,000 2nd Series, 4.15% due 4/01/2025 22,000
27,400 AMT, 4.25% due 9/01/2034 27,400
27,800 Refunding, 4.15% due 9/01/2026 27,800
16,100 Refunding, 3rd Series, 4.15% due 9/01/2025 16,100
41,000 Cobb County, Georgia, TAN, UT, 4% due 12/31/1998 41,051
5,000 Doughterty County, Georgia, School District, TAN, 4% due 12/31/1998 5,005
2,915 Eagle Tax-Exempt Trust, Georgia, Resource Finance Authority, VRDN,
Series 1996-C, Class 1001, 3.50% due 12/01/2016 (a) 2,915
27,000 Fulton County, Georgia, TAN (General Fund), 4.25% due 12/31/1998 27,042
29,706 Georgia Municipal Association, Pooled Bonds, COP, VRDN, 4% due
12/15/2020 (a)(c) 29,706
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Georgia Georgia Municipal Gas Authority Revenue Bonds, VRDN (a):
(concluded) $ 15,000 (Agency Project), Series A, 3.95% due 11/01/2006 $ 15,000
59,750 (Gas Portfolio II Project), Series C, 4% due 1/01/2008 59,750
15,800 Heard County, Georgia, Development Authority, PCR (Georgia Power
Company Plant--Wansley), VRDN, 4.10% due 9/01/2029 (a) 15,800
Metropolitan Atlanta Rapid Transit Authority, Georgia, Sales Tax Revenue
Bonds, VRDN (a):
7,005 4.15% due 7/01/2002 7,005
7,340 4.15% due 7/01/2004 7,340
18,600 Monroe County, Georgia, Development Authority, PCR (Georgia Power Co.--
Scherer), VRDN, 1st Series, 4.15% due 7/01/2025 (a) 18,600
5,400 Municipal Electric Authority, Georgia (Project One), VRDN, Series B, 3.90% due
1/01/2016 (a) 5,400
5,355 Municipal Electric Authority, Georgia, Refunding (General Resolution Projects),
Sub-Series A, 5% due 1/01/1999 (c) 5,373
Putnam County, Georgia, Development Authority, PCR (Georgia Power
Company Plant Project), VRDN (a):
4,600 4.10% due 3/01/2024 4,600
13,700 2nd Series, 4.15% due 9/01/2029 13,700
8,600 Refunding, 4.15% due 4/01/2032 8,600
Idaho--0.2% 22,600 Idaho Health Facilities Authority Revenue Bonds (Pooled Financing Program),
ACES, 4% due 10/01/2010 (a) 22,600
Illinois-- 7,000 Chicago, Illinois, IDR (Enterprise Center VIII Project), VRDN, AMT, 3.37% due
7.7% 6/01/2022 (a) 7,000
11,000 Chicago, Illinois, Midway Airport Revenue Bonds, VRDN, Series A (Second Lien),
4.30% due 1/01/2029 (a)(c) 11,000
Chicago, Illinois, O'Hare International Airport Revenue Bonds (American
Airlines) (a):
26,900 DATES, Series B, 4.20% due 12/01/2017 26,900
23,500 DATES, Series C, 4.20% due 12/01/2017 23,500
18,200 DATES, Series D, 4.20% due 12/01/2017 18,200
20,200 VRDN, Series A, 4.20% due 12/01/2017 20,200
6,430 Chicago, Illinois, O'Hare International Airport Revenue Bonds (General Airport),
VRDN, Second Lien, Series B, 3.92% 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, 4.15% due 5/01/2018 (a) 14,800
15,000 Chicago, Illinois, Park District, TAW, UT, 4.30% due 9/17/1999 15,104
16,895 Chicago, Illinois, GO, VRDN, Series B, 3.90% due 1/01/2012 (a) 16,895
Eagle Tax-Exempt Trust, Chicago, Illinois, GO, VRDN (a):
19,800 (Emergency Phone), Series 1996-C, Class 1302, 3.70% due 1/01/2023 19,800
14,380 Series 1995, Class 1301, 3.75% due 1/01/2004 14,380
9,900 Series 1996-C, Class 1302, 3.60% due 7/01/2020 9,900
9,900 Series 1998, Class 1301, 3.70% due 11/01/2015 9,900
12,200 Illinois Development Finance Authority, PCR, Refunding (Commonwealth Edison
Company Project), VRDN, Series B, 3.95% due 10/15/2014 (a) 12,200
Illinois Development Finance Authority Revenue Bonds, VRDN (a):
24,300 (Lyric Opera Chicago Project), 4% due 12/01/2028 24,300
6,000 Refunding (Olin Corporation Project), Series A, 4.20% due 6/01/2004 6,000
Illinois Educational Facilities Authority Revenue Bonds, VRDN (a):
20,000 (The Adler Planetarium), 4% due 4/01/2031 20,000
16,300 (Art Institute of Chicago), 4.05% due 3/01/2027 16,300
5,100 (Chicago Historical Society), 4% due 12/01/2025 5,100
26,100 (Illinois Institute of Technology), Series A, 4% due 9/01/2025 26,100
17,800 (Northwestern), 3.70% due 12/01/2025 17,800
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (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, 4.15% due 11/01/2020 $ 6,900
8,400 (Hospital Sisters Services, Inc.), UPDATES, Series E, 4% due
12/01/2014 (b)(c) 8,400
41,000 (Northwest Community Hospital), VRDN, 4% due 7/01/2025 41,000
27,600 (Northwestern Memorial Hospital), VRDN, 4.10% due 8/15/2025 27,600
80,555 Refunding (Advocate Health Care), VRDN, Series B, 4.15% due 8/15/2022 80,555
20,000 Refunding (Little Company of Mary Hospital), VRDN, Series B, 4.05% due
8/15/2021 (c) 20,000
32,100 (Resurrection Health Care System), VRDN, 4.10% due 5/01/2011 32,100
7,000 (Revolving Fund Pooled Financing Program), VRDN, Series F, 3.90%
due 8/01/2015 7,000
Illinois Health Facilities Authority Revenue Bonds (Evanston Hospital
Corporation Project), CP:
22,000 3.85% due 11/30/1998 22,000
12,000 Series A, 3.90% due 10/15/1998 12,000
10,000 Series B, 3.85% due 2/01/1999 10,000
10,000 Series C, 3.85% due 2/01/1999 10,000
10,000 Series D, 3.85% due 2/01/1999 10,000
18,815 Illinois State, GO, VRDN, UT, Series SG-60, 4.12% due 8/01/2019 (a)(c) 18,815
4,900 Illinois Student Assistance Commission, Student Loan Revenue Bonds, VRDN,
AMT, Series A, 4.05% due 3/01/2006 (a) 4,900
21,350 Regional Transportation Authority, Illinois, VRDN, Series SG-82, 4.12% 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 4.25% due 8/01/2021 11,100
10,600 4.25% due 4/01/2022 10,600
Indiana-- 3,125 Elkhart County, Indiana, Mortgage Revenue Bonds (Hubbard Hill Estates),
3.0% VRDN, Series A, 4% due 7/01/2027 (a) 3,125
Fort Wayne, Indiana, Hospital Authority Revenue Bonds (Parkview Memorial
Hospital), VRDN (a):
1,645 Series B, 3.90% due 1/01/2016 1,645
2,700 Series B, 3.90% due 1/01/2020 2,700
3,505 Series C, 3.90% due 1/01/2016 3,505
5,670 Series D, 3.90% due 1/01/2016 5,670
5,800 Hammond, Indiana, PCR, Refunding (Amoco Oil Co. Project), VRDN, 4.10% due
2/01/2022 (a) 5,800
48,500 Indiana Bond Bank, Advance Funding Program Notes, Series A-2, 4% due
1/20/1999 48,561
Indiana Health Facilities Financing Authority, Hospital Revenue Bonds, VRDN (a):
10,650 (Capital Access Designated Pool), 3.90% due 1/01/2012 10,650
20,700 (Clarian Health Partners, Inc), Series B, 4.05% due 2/15/2026 20,700
15,000 (Community Hospitals Project), Series A, 4.05% due 7/01/2027 15,000
15,000 Refunding (Charity Obligation Group), Series E, 4% due 11/01/2026 15,000
18,200 Refunding (Clarian Health Partners, Inc.), Series A, 4.05% due 2/15/2026 (c) 18,200
22,500 Indiana Secondary Market Educational Loans Incorporated, Educational Loan
Revenue Bonds, VRDN, AMT, Series B, 4% due 12/01/2014 (a)(e) 22,500
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Indiana $ 5,000 Indianapolis, Indiana, Local Public Improvement Bond Bank Notes, Series B,
(concluded) 4.25% due 1/11/1999 (f) $ 5,008
Jasper County, Indiana, PCR, Refunding (Northern Indiana Public Service Co.),
VRDN (a):
9,800 Series A, 4.15% due 8/01/2010 9,800
8,000 Series B, 4.15% due 6/01/2013 8,000
36,800 Series C, 4.15% due 4/01/2019 36,800
9,400 Princeton, Indiana, PCR, Refunding (PSI Energy Inc. Project), VRDN, 4.15% due
4/01/2022 (a) 9,400
9,000 Purdue University, Indiana, University Revenue Bonds (Student Fees), VRDN,
Series O, 3.80% due 7/01/2019 (a) 9,000
Rockport, Indiana, PCR, Refunding (AEP Generating Co. Project), VRDN (a)(e):
14,200 Series A, 4.15% due 7/01/2025 14,200
7,900 Series B, 4.15% due 7/01/2025 7,900
Iowa--2.3% Iowa Finance Authority, Solid Waste Disposal Revenue Bonds (Cedar River
Paper Company Project), VRDN (a):
4,730 4.30% due 3/01/2033 4,730
42,000 AMT, Series A, 4.30% due 6/01/2024 42,000
20,500 AMT, Series A, 4.30% due 5/01/2025 20,500
66,400 Series A, 4.30% due 7/01/2023 66,400
45,000 Iowa State School Cash Anticipation Program (Iowa School Corp. Warrants
Certificates), Series A, 4.50% due 6/25/1999 (g) 45,271
14,500 Iowa Student Loan Liquidity Corporation, Student Loan Revenue Bonds, VRDN,
AMT, Series B, 4.10% due 12/01/2013 (a)(e) 14,500
19,200 Polk County, Iowa, Revenue Bonds (Catholic Health), VRDN, Series B, 3.90% due
12/01/2015 (a) 19,200
Kansas--0.3% 9,100 Butler County, Kansas, Solid Waste Disposal Facilities Revenue Bonds (Texaco
Refining and Marketing), VRDN, AMT, Series A, 4.25% due 8/01/2024 (a) 9,100
17,500 Kansas State, Development Finance Authority, Health Facilities Revenue Bonds
(Stormont-Vail), VRDN, Series M, 4.15% due 11/15/2023 (a)(c) 17,500
Kentucky-- 5,100 Ashland, Kentucky, PCR (Calgon Carbon Corporation Project), VRDN, Series A,
2.4% 4.25% due 10/01/2006 (a) 5,100
22,700 Carroll County, Kentucky, Solid Waste Disposal Facilities Revenue Bonds
(Kentucky Utilities Co. Project), VRDN, AMT, Series A, 4.25% due 11/01/2024 (a) 22,700
Daviess County, Kentucky, Solid Waste Disposal Facilities Revenue Bonds
(Scott Paper Co. Project), VRDN, AMT (a):
44,100 Series A, 4.25% due 12/01/2023 44,100
9,300 Series A, 4.25% due 5/01/2024 9,300
26,200 Series B, 4.25% due 12/01/2023 26,200
21,700 Series B, 4.25% due 5/01/2024 21,700
35,000 Kentucky Asset/Liability Commission, General Fund Revenue Bonds, TRAN,
Series A, 4.50% due 6/25/1999 35,231
14,000 Kentucky Economic Development Finance Authority Revenue Bonds (Pooled
Hospital Loan Program), VRDN, 4.15% due 8/01/2018 (a) 14,000
38,300 Kentucky State Pollution Abatement and Water Resource Finance Authority, PCR
(Toyota Motors), VRDN, AMT, 4.65% due 8/13/2006 (a) 38,300
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Louisiana-- $ 31,500 Calcasieu Parish Inc., Louisiana, IDB, Environmental Revenue Refunding Bonds
3.1% (Citgo Petroleum Corporation), VRDN, AMT, 4.25% due 3/01/2025 (a) $ 31,500
8,800 Eagle Tax-Exempt Trust, Louisiana State, VRDN, Series 94, Class 1803, 4.12% due
5/01/2008 (a) 8,800
East Baton Rouge Parish, Louisiana, PCR, Refunding (Exxon Project), VRDN (a):
10,750 4.10% due 11/01/2019 10,750
43,200 4.15% due 3/01/2022 43,200
Louisiana Public Facilities Authority, Hospital Revenue Bonds (Willis-Knighton
Medical Center Project), VRDN (a)(e):
33,200 4% due 9/01/2025 33,200
30,500 4% due 9/01/2027 30,500
Louisiana State Offshore Terminal Authority, Deepwater Port Revenue
Refunding Bonds (Loop Inc.--First Stage)(a):
21,700 ACES, 4.05% due 9/01/2006 21,700
19,500 VRDN, Series A, 4.05% due 9/01/2008 19,500
24,200 Plaquemines Parish, Louisiana, Environmental Revenue Bonds (BP
Exploration & Oil), VRDN, AMT, 4.25% due 10/01/2024 (a) 24,200
Saint Charles Parish, Louisiana, PCR, VRDN (a):
24,400 (Shell Oil Company--Norco Project), AMT, 4.25% due 11/01/2021 24,400
4,400 (Shell Oil Company Project), 3.80% due 6/01/2005 4,400
21,000 (Shell Oil Company Project), AMT, Series A, 4.25% due 10/01/2022 21,000
4,400 South Louisiana Port Commission, Louisiana, Port Revenue Refunding Bonds
(Occidental Petroleum Corporation Project), VRDN, 4% due 7/01/2018 (a) 4,400
Maine--0.0% Maine Health and Higher Educational Facilities Authority Revenue Bonds (VHA
New England Inc.), VRDN (a)(e):
1,250 Series B, 4% due 12/01/2025 1,250
1,450 Series F, 4% due 12/01/2025 1,450
Maryland-- 35,700 Baltimore, Maryland, Port Facilities Revenue Bonds (Occidental Petroleum
0.8% Corporation), VRDN, 3.55% due 10/14/2011 (a) 35,700
32,500 Montgomery County, Maryland, CP, 3.50% due 11/10/1998 32,500
Massachusetts-- 20,900 Eagle Tax-Exempt Trust, Massachusetts, GO, VRDN, Series 1993-J, 3.70%
0.6% due 12/10/1998 (a) 20,900
8,700 Massachusetts State Health and Educational Facilities Authority Revenue Bonds
(Capital Asset Program), VRDN, Series E, 4.05% due 1/01/2035 (a) 8,700
24,000 Massachusetts State Turnpike Authority, Metropolitan Highway Systems
Revenue Bonds, VRDN, Series A-50, 4.35% due 1/01/2027 (a) 24,000
Michigan-- 10,600 Delta County, Michigan, Economic Development Corporation, Environmental
3.7% Improvement Revenue Refunding Bonds (Mead Escambia Paper), VRDN,
Series D, 4.15% due 12/01/2023 (a) 10,600
17,100 Grand Rapids, Michigan, Water Supply System, Revenue Refunding Bonds,
VRDN, 3.80% due 1/01/2020 (a)(f) 17,100
8,460 Holly, Michigan, Area School District, VRDN, UT, Series SG-50, 4.12% due
5/01/2020 (a)(f) 8,460
Kent Hospital Financial Authority, Michigan, Revenue Refunding Bonds
(Spectrum Health), VRDN (a)(c):
24,200 Series B, 3.45% due 1/15/2026 24,200
26,800 Series C, 3.45% due 1/15/2026 26,800
Michigan Municipal Bond Authority Revenue Notes:
73,000 Series D-1, 4.25% due 8/27/1999 73,428
20,000 Series D-2, 4.25% due 8/27/1999 20,117
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Michigan Michigan State Strategic Fund, Limited Obligation Revenue Refunding
(concluded) Bonds, VRDN (a):
$ 11,600 (Consumers Power Company Project), Series A, 4.10% due 6/15/2010 $ 11,600
6,150 (Detroit Edison Company), Series CC, 4.10% due 9/01/2030 6,150
17,300 Monroe County, Michigan, Economic Development Corporation, Limited
Obligation Revenue Refunding Bonds (Detroit Edison Co.), VRDN, Series CC,
4.10% due 10/01/2024 (a) 17,300
Royal Oak, Michigan, Hospital Finance Authority Revenue Bonds (William
Beaumont Hospital), VRDN (a):
18,200 Series J, 4.15% due 1/01/2003 18,200
17,300 Series L, 4.15% due 1/01/2027 17,300
University of Michigan, University Hospital Revenue Bonds, VRDN, Series A (a):
54,100 4.15% due 12/01/2027 54,100
15,900 (Medical Service Plan), 4.15% due 12/01/2027 15,900
13,900 Refunding, 4.15% due 12/01/2019 13,900
Minnesota-- Eagle Tax-Exempt Trust, Minnesota, GO, VRDN (a):
1.0% 45,000 Series 1993-A, 3.70% due 8/01/2003 45,000
1,825 Series 1993-A, 3.70% due 8/01/2004 1,825
24,885 Series 1993-G, 3.70% due 8/01/2007 24,885
17,575 Minnesota State, GO, Refunding, UT, 4.25% due 6/01/1999 17,638
Mississippi-- 11,600 Harrison County, Mississippi, PCR, Refunding (E.I. du Pont de Nemours & Co.),
1.3% VRDN, 4.15% due 9/01/2010 (a) 11,600
7,000 Jackson County, Mississippi, Industrial Sewer Facilities Revenue Bonds
(Chevron USA, Inc. Project), VRDN, 4.25% due 12/15/2024 (a) 7,000
Jackson County, Mississippi, PCR, Refunding (Chevron USA, Inc. Project),
VRDN (a):
22,200 4% due 12/01/2016 22,200
22,895 4% due 6/01/2023 22,895
7,200 Jackson County, Mississippi, Port Facility Revenue Refunding Bonds (Chevron
USA, Inc. Project), VRDN, 4.10% due 6/01/2023 (a) 7,200
13,520 Mississippi Business Finance Corporation, Solid Waste Disposal Revenue
Refunding Bonds (Mississippi Power Company Project), VRDN, AMT,
4.25% due 5/01/2028 (a) 13,520
3,000 Mississippi Hospital Equipment and Facilities Authority Revenue Bonds
(Mississippi Baptist Medical Center), VRDN, Series B, 3.95% due 7/01/2012 (a) 3,000
32,300 Perry County, Mississippi, PCR, Refunding (Leaf River Forest Project), VRDN,
4.05% due 3/01/2002 (a) 32,300
Missouri-- 30,000 Eagle Tax-Exempt Trust, Missouri, VRDN, Series 1993-E, 4.12% due 8/01/2006 (a) 30,000
2.1% Missouri Higher Education Loan Authority, Student Loan Revenue Bonds,
VRDN, AMT (a):
7,800 Series A, 4% due 6/01/2017 7,800
11,700 Series B, 4% due 6/01/2020 11,700
Missouri State Environmental Improvement & Energy Resource Authority, PCR
(Union Electric Company):
14,000 Series A, 3.75% due 12/01/1998 14,000
13,500 Series B, 3.75% due 12/01/1998 13,500
5,000 Missouri State Health and Educational Facilities Authority, Health Facilities
Revenue Bonds (Sisters of Mercy Health Systems), VRDN, Series A, 3.90% due
6/01/2019 (a) 5,000
12,000 Missouri State Health and Educational Facilities Authority, Special School
District (Advanced Funding Program), Series L, 4.25% due 9/13/1999 12,066
95,000 University of Missouri, Capital Projects Notes, Series FY 1998-99, 4.25%
due 6/30/1999 95,435
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Nebraska-- Nebhelp Incorporated, Nebraska, Student Loan Program Revenue Bonds,
0.1% VRDN (a)(h):
$ 3,550 AMT, Series A, 4% due 12/01/2016 $ 3,550
3,100 (Multiple Mode), Series C, 3.90% due 12/01/2015 (c) 3,100
Nevada--1.1% 93,515 Clark County, Nevada, Airport Improvement Revenue Refunding Bonds, VRDN,
Series A, 4% due 7/01/2012 (a)(c) 93,515
7,075 Nevada Housing Division (Mesquite Bluffs Apartments), VRDN, AMT, Series B,
4.25% due 5/01/2028 (a) 7,075
New 1,400 New Hampshire Higher Educational and Health Facilities Authority Revenue
Hampshire-- Bonds (VHA New England Inc.), VRDN, Series D, 4% due 12/01/2025 (a)(e) 1,400
0.1% 5,700 New Hampshire State, HFA, M/F Housing Revenue Bonds (P.R.A. Properties--
Pheasant Run Project), VRDN, AMT, 4% due 5/01/2025 (a) 5,700
New Jersey-- 27,300 Eagle Tax-Exempt Trust, New Jersey, VRDN, Series 1996, Class 3001, 3.70%
0.5% due 2/15/2007 (a) 27,300
14,000 Essex County, New Jersey, UT, TAN, 4% due 11/30/1998 14,010
New Mexico-- Farmington, New Mexico, PCR (Arizona Public Service Co.), VRDN (a):
2.4% 23,500 AMT, Series C, 4.30% due 9/01/2024 23,500
31,000 Refunding, Series A, 4.15% due 5/01/2024 31,000
19,020 Refunding, Series B, 4.05% due 9/01/2024 19,020
8,600 Hurley, New Mexico, PCR (Kennecott Santa Fe), VRDN, 4.15% due 12/01/2015 (a) 8,600
32,900 New Mexico State Hospital, Equipment Loan Council Revenue Bonds (Catholic
Health), VRDN, Series B, 3.90% due 12/01/2022 (a) 32,900
100,000 New Mexico State, TRAN, 4.25% due 6/30/1999 100,469
New York-- 16,000 Brentwood, New York, Union Free School District, TAN, UT, 3.75% due 6/30/1999 16,014
6.2% 20,000 Copake Taconic Hills, New York, Central School District, BAN, UT, 4.25% due
4/08/1999 20,055
24,700 Eagle Tax-Exempt Trust, New York, Memorial Sloan, VRDN, Series 1998,
Class 3202, 3.70% due 7/01/2023 (a) 24,700
4,000 Hicksville, New York, Union Free School District, UT, TAN, 3.90% due 6/23/1999 4,008
Long Island Power Authority, New York, Electric System Revenue Bonds,
VRDN (a):
84,500 Sub-Series 2, 3.80% due 5/01/2033 84,500
39,200 Sub-Series 5, 4% due 5/01/2033 39,200
20,000 Municipal Assistance Corporation, New York City, New York, VRDN,
Sub-Series K-1, 3.90% due 7/01/2008 (a) 20,000
New York City, New York, GO, VRDN, UT (a):
8,400 Series B, Sub-Series B-3, 4.10% due 8/15/2004 (c) 8,400
6,700 Sub-Series A-4, 4.05% due 8/01/2023 6,700
3,000 Sub-Series A-7, 4.10% due 8/01/2019 3,000
New York City, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Bonds (a):
21,500 MSTR, Series SGB-27, 4.17% due 6/15/2024 (g) 21,500
15,870 VRDN, Series A-73, 4.25% due 6/15/2029 15,870
24,900 VRDN, Series A, 4.15% due 6/15/2025 (f) 24,900
23,100 VRDN, Series G, 4% due 6/15/2024 (f) 23,100
11,440 New York City, New York, Refunding, UT, Series A, 4.50% due 8/01/1999 11,512
24,400 New York City, New York, Transitional Finance Authority Revenue Bonds
(Future Tax Secured), VRDN, Series C, 4.05% due 5/01/2028 (a) 24,400
8,500 New York City, New York, VRDN, UT, Series B, Sub-Series B-5, 4.10% due
8/15/2022 (a)(c) 8,500
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
New York $ 19,000 New York State, Local Government Assistance Corporation, VRDN,
(concluded) Series SGA-59, 4.10% due 4/01/2019 (a)(e) $ 19,000
55,065 New York State Power Authority, Revenue and General Purpose Bonds
(Junior Lien), 3.45% due 3/01/1999 55,065
40,000 Rochester, New York, BAN, UT, Series IV, 4.25% due 10/29/1998 40,012
47,900 Triborough Bridge and Tunnel Authority, New York, Special Obligation, VRDN,
3.95% due 11/02/1998 (a)(b)(f) 47,900
49,500 Westchester County, New York, TAN, UT, 3.59% due 12/29/1998 49,502
North Carolina-- Craven County, North Carolina, Industrial Facilities and Pollution Control
0.6% Financing Authority (Cravenwood Energy Project), VRDN, AMT (a):
2,100 Series B, 4.20% due 5/01/2011 2,100
3,000 Series C, 4.20% due 5/01/2011 3,000
16,875 North Carolina Medical Care Commission, Health Care Facilities Revenue Bonds
(Cabarrus Memorial Hospital Project), VRDN, 3.95% due 3/01/2012 (a) 16,875
North Carolina Medical Care Commission, Hospital Revenue Bonds (a):
8,800 (Carol Woods Project), VRDN, 4.15% due 4/01/2021 8,800
1,700 (Duke University Hospital Project), VRDN, Series B, 3.95% due 6/01/2015 1,700
2,000 (Duke University Hospital Project), VRDN, Series C, 3.95% due 6/01/2015 2,000
10,200 (Pooled Financing Project), ACES, Series A, 4.05% due 10/01/2020 10,200
Raleigh-Durham, North Carolina, Airport Authority, Special Facility Revenue
Refunding Bonds (American Airlines), VRDN (a):
8,300 Series A, 4.15% due 11/01/2015 8,300
2,000 Series B, 4.15% due 11/01/2015 2,000
North Dakota-- 12,900 Grand Forks, North Dakota, Health Care Facilities Revenue Bonds (The United
0.1% Hospital Obligation Group), VRDN, Series A, 4.20% due 12/01/2025 (a) 12,900
Ohio--1.8% Cuyahoga County, Ohio, Hospital Revenue Bonds, VRDN (a):
25,000 (The Cleveland Clinic), Series D, 4.15% due 1/01/2026 25,000
18,750 Refunding, Series A, 3.90% due 1/01/2016 (e) 18,750
10,500 Eagle Tax-Exempt Trust, Ohio, VRDN, Series 1995, Class 3502, 4.07% due
7/01/2015 (a) 10,500
18,385 Franklin County, Ohio, Hospital Revenue Refunding and Improvement Bonds
(US Health Corp.), VRDN, Series A, 4% due 12/01/2021 (a) 18,385
46,700 Montgomery County, Ohio, Revenue Refunding Bonds (Miami Valley Hospital),
VRDN, Series A, 4.15% due 11/15/2022 (a) 46,700
1,865 Ohio HFA, M/F Housing Revenue Bonds (Kenwood Congregate Retirement),
VRDN, 3.50% due 12/01/2015 (a) 1,865
Ohio State Air Quality Development Authority Revenue Bonds, VRDN,
Series B (a):
13,900 4.15% due 12/01/2015 13,900
8,100 Refunding (Cincinnati Gas & Electric), 4.10% due 9/01/2030 8,100
20,000 Ohio State University, General Receipts, VRDN, 3.90% due 12/01/2007 (a) 20,000
4,200 Paudling County, Ohio, Solid Waste Disposal Revenue Bonds (Lafarge
Corporation Project), VRDN, AMT, 4% due 8/01/2026 (a) 4,200
Oklahoma-- 10,250 Grand River Dam Authority, Oklahoma, Revenue Bonds, VRDN, Series SG-42,
0.1% 4.12% due 6/01/2009 (a)(e) 10,250
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Oregon--0.2% $ 16,140 Oregon State Housing and Community Services Department, Mortgage Revenue
Bonds (S/F Mortgage Program), Series E, 3.60% due 8/31/1999 $ 16,140
Pennsylvania-- Allegheny County, Pennsylvania, Hospital Development Authority Revenue
4.3% Bonds (Presbyterian Health Center), VRDN (a)(c):
5,000 Series A, 4.05% due 3/01/2020 5,000
6,300 Series C, 4.05% due 3/01/2020 6,300
33,500 Allegheny County, Pennsylvania, IDA, Pollution Revenue Bonds (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, 4.05% due 12/01/2014 (a) 2,500
Delaware County, Pennsylvania, IDA, PCR (Philadelphia Electric Company),
Refunding, VRDN, Series A (a):
5,600 4.20% due 12/01/2009 5,600
15,700 4.05% due 8/01/2016 15,700
23,850 Delaware Valley, Pennsylvania, Regional Financial Authority, Local Government
Revenue Bonds, VRDN, Series A-74, 4.25% due 8/01/2028 (a) 23,850
Eagle Tax-Exempt Trust, Pennsylvania, GO, VRDN (a):
17,000 Series 1994, Class 3803, 4.12% due 5/01/2008 17,000
12,300 Series 1996-C, Class 4301, 4.12% due 5/01/2015 12,300
35,000 Emmaus, Pennsylvania, General Authority Revenue Bonds, VRDN, 4% due
12/01/2028 (a)(g) 35,000
43,000 Geisinger, Pennsylvania, Health Systems Authority Revenue Bonds, VRDN,
Series B, 4.15% due 11/02/1998 (a)(b) 43,000
12,000 Lackawanna County, Pennsylvania, VRDN, UT, Series SGB-38, 4.17% due
9/15/2020 (a)(e) 12,000
Pennsylvania State Higher Education Assistance Agency, Student Loan Revenue
Bonds, VRDN, AMT (a):
11,200 Series A, 4.10% due 1/01/2018 (h) 11,200
5,000 Series B, 4.10% due 7/01/2018 5,000
18,725 Pennsylvania State Higher Educational Facilities Authority, College and
University Revenue Bonds (Temple University), VRDN, 4.05% due 10/01/2009 (a) 18,725
Pennsylvania State Higher Educational Facilities Authority, Revenue Refunding
Bonds (Carnegie Mellon University), VRDN (a):
13,600 Series A, 4.15% due 11/01/2025 13,600
37,650 Series B, 4.15% due 11/01/2027 37,650
13,200 Series D, 4.15% due 11/01/2030 13,200
Philadelphia, Pennsylvania, Hospitals and Higher Education Facilities
Authority, Hospital Revenue Bonds (Children's Hospital of Philadelphia
Project), VRDN (a):
20,300 4.15% due 3/01/2027 20,300
38,300 Series A, 4.15% due 3/01/2027 38,300
19,000 Philadelphia, Pennsylvania, TRAN, Series A, 4.25% due 6/30/1999 19,084
5,200 Schuylkill County, Pennsylvania, IDA, Resource Recovery Revenue Refunding
Bonds (Northeastern Power Company), VRDN, Series A, 4.05% due 12/01/2022 (a) 5,200
South Berkeley County, South Carolina, Industrial Revenue Bonds (Amoco Chemical
Carolina-- Co. Project), VRDN, AMT (a):
1.8% 15,300 4.25% due 4/01/2027 15,300
5,700 4.25% due 4/01/2028 5,700
2,000 Berkeley County, South Carolina, Pollution Control Facilities, Revenue Refunding
Bonds (Amoco Chemical Co. Project), VRDN, 4.10% due 7/01/2012 (a) 2,000
44,000 Charleston County, South Carolina, School District, BAN, Series B, 4% due
4/30/1999 44,130
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
South Florence County, South Carolina, Solid Waste Disposal and Wastewater
Carolina Treatment Facilities Revenue Bonds (Roche Carolina Inc. Project), VRDN,
(concluded) AMT (a):
$ 35,000 4.25% due 4/01/2026 $ 35,000
19,200 4.25% due 4/01/2027 19,200
15,000 Greenville County, South Carolina, School District (Enhance Program), UT, 4%
due 3/01/1999 15,028
South Carolina Jobs, EDA, Revenue Bonds, VRDN (a):
4,430 (Saint Francis Hospital Project), 4.20% due 7/01/2022 4,430
5,400 (Wellman, Inc. Project), AMT, 4.30% due 12/01/2010 5,400
12,095 (Wellman, Inc. Project), AMT, 4.30% due 12/01/2012 12,095
4,500 South Carolina State, Public Service Authority, Revenue Refunding Bonds,
Series B, 5% due 1/01/1999 (e) 4,516
South Dakota-- 20,000 Lawrence County, South Dakota, Solid Waste Disposal Revenue Bonds
0.2% (Homestake Mining), VRDN, AMT, Series A, 4.25% due 7/01/2032 (a) 20,000
Tennessee-- Clarksville, Tennessee, Public Building Authority Revenue Bonds (Pooled
2.9% Financing, VRDN (a):
15,720 4% due 10/01/2025 15,720
25,000 4% due 11/01/2027 25,000
9,400 Cleveland, Tennessee, IDB, Revenue Bonds (Newly Wed Foods Incorporated
Project), VRDN, AMT, 4.10% due 1/01/2012 (a) 9,400
110,000 Johnson City, Tennessee, Health and Educational Facilities Board Revenue Bonds,
VRDN, Series A, 3.60% due 11/01/1999 (a)(c) 110,000
8,100 Loudon, Tennessee, IDB, PCR, Refunding (A.E. Staley Manufacturing Co.
Project), VRDN, 4% due 9/01/2001 (a) 8,100
13,000 Montgomery County, Tennessee, Public Building Authority, Pooled Financing
Revenue Bonds (Montgomery County Loan), VRDN, 4% due 7/01/2019 (a) 13,000
14,955 Morristown, Tennessee, IDB, PCR, Refunding (Akzo Chemicals, Inc. Project),
VRDN, 4% due 8/01/2001 (a) 14,955
21,000 Tennessee State Local Development Authority Revenue Bonds (Student Loan
Programs), Series A, 4% due 5/19/1999 21,032
26,500 Tennessee State School Bond Authority, CP, Series A, 3.70% due 10/27/1998 26,500
22,000 Tennessee State, VRDN, UT, Series A, 3.95% due 7/01/2001 (a) 22,000
Texas--19.6% 23,265 Austin, Texas, Utilities Systems Revenue Bonds, CP, Series A, 3.67% due
12/08/1998 23,265
Brazos River Authority, Texas, PCR (Texas Utilities Electric Co.), VRDN, AMT (a):
9,700 Refunding, Series A, 4.30% due 2/01/2032 9,700
24,005 Refunding, Series B, 4.25% due 2/01/2032 (c) 24,005
15,800 Refunding, Series C, 4.25% due 6/01/2030 (e) 15,800
8,400 Refunding, Series C, 4.25% due 2/01/2032 (c) 8,400
15,600 Series A, 4.25% due 4/01/2030 15,600
33,700 Brazos River Authority, Texas, Revenue Refunding Bonds (Houston Lighting and
Power Co.), VRDN, AMT, Series 1997, 4.25% due 11/01/2018 (a)(e) 33,700
4,000 Corpus Christi, Texas, IDR (Dedietrich USA Incorporated Project), VRDN, AMT,
4.45% due 11/01/2008 (a) 4,000
Dallas-Fort Worth, Texas, Regional Airport Revenue Bonds, MSTR, VRDN (a):
15,785 AMT, Series SGA-46, 4.10% due 11/01/2020 (c) 15,785
25,300 AMT, Series SGA-49, 4.10% due 11/01/2023 (c) 25,300
9,495 AMT, Series SGA-52, 4.10% due 11/01/2017 (c) 9,495
6,600 Series SGB-5, 4.17% due 11/01/2015 (f) 6,600
9,500 Eagle Tax-Exempt Trust, Dallas, Fort Worth, Texas, VRDN, Series 1996-C,
Class 4301, 3.45% due 11/01/2005 (a) 9,500
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Texas $ 5,300 Grapevine, Texas, Industrial Development Corporation, Airport Revenue
(continued) Refunding Bonds (Southern Air Transportation Project), VRDN, 3.95% due
3/01/2010 (a) $ 5,300
7,300 Gulf Coast, Texas, IDA, Marine Terminal Revenue Bonds (Amoco Oil Co.
Project), VRDN, AMT, 4.25% 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 4.25% due 5/01/2025 13,700
7,400 4.25% due 4/01/2026 7,400
28,500 Gulf Coast, Waste Disposal Authority, Texas, Environmental Facilities Revenue
Bonds (Amoco Oil Co. Project), VRDN, AMT, 4.25% due 1/01/2026 (a) 28,500
Gulf Coast, Waste Disposal Authority, Texas, PCR, VRDN (a):
42,200 AMT (Amoco Oil Co. Project), 4.25% due 5/01/2023 42,200
30,700 AMT (Amoco Oil Co. Project), 4.25% due 6/01/2024 30,700
35,575 Refunding (Amoco Oil Co. Project), 4.05% due 10/01/2017 35,575
14,400 Refunding (Exxon Project), 4.10% due 6/01/2020 14,400
19,500 Gulf Coast, Waste Disposal Authority, Texas, Pollution Control and Solid Waste
Disposal Revenue Refunding Bonds (Amoco Oil Co. Project), VRDN, AMT, 4.25%
due 5/01/2024 (a) 19,500
Gulf Coast, Waste Disposal Authority, Texas, Solid Waste Disposal Revenue
Bonds (Amoco Oil Co. Project), VRDN, AMT (a):
32,800 4.25% due 7/01/2027 32,800
37,600 Refunding, 4.25% due 8/01/2023 37,600
17,710 Harris County, Texas, GO, VRDN, Series SG-45, 4.12% due 8/15/2016 (a)(f) 17,710
Harris County, Texas, Health Facilities Development Corporation, Hospital
Revenue Bonds, VRDN (a):
283,900 (Methodist Hospital), 4.20% due 12/01/2025 283,900
11,700 Refunding (Memorial Hospital System Project), Series B, 4% due 6/01/2024 (c) 11,700
145,200 Refunding (Methodist Hospital), 4.20% due 12/01/2026 145,200
Harris County, Texas, Industrial Development Corporation, PCR
(Exxon Project) (a):
7,900 DATES, Series 1984-A, 4.15% due 3/01/2024 7,900
10,200 DATES, Series 1984-B, 4.15% due 3/01/2024 10,200
8,100 VRDN, AMT, 4.15% due 8/15/2027 8,100
33,050 Harris County, Texas, Industrial Development Corporation, PCR, Refunding
(Shell Oil Company Project), VRDN, 4.05% due 4/01/2027 (a) 33,050
46,100 Harris County, Texas, Industrial Development Corporation, Solid Waste Disposal
Revenue Bonds (Deer Park Limited Partnership), VRDN, AMT, Series A, 4.30%
due 2/01/2023 (a) 46,100
Harris County, Texas (Toll Road), Sub-Lien, VRDN (a):
25,000 Series H, 3.95% due 8/01/2020 25,000
31,900 UT, Series B, 4% due 8/01/2015 31,900
24,200 Hockley County, Texas, Industrial Development Corporation, PCR (Amoco
Project--Standard Oil Co.), 3.60% due 3/01/1999 24,200
12,430 Lower Colorado River Authority, Texas, Revenue Refunding Bonds, VRDN, 3rd
Junior Lien, 4% due 1/01/2013 (a)(c) 12,430
11,500 Lubbock, Texas, Health Facilities Development Corporation Revenue Bonds
(Saint Joseph Health System), VRDN, Series A, 4.10% due 7/01/2013 (a) 11,500
44,600 Matagorda County, Texas, Navigational District No. 1, Revenue Refunding Bonds
(Houston Lighting & Power Co. Project), VRDN, AMT, Series 1997, 4.25% due
11/01/2028 (a)(e) 44,600
17,600 North Central Texas, Health Facilities Development Corporation Revenue Bonds
(Methodist Hospitals--Dallas), VRDN, Series B, 4.15% due 10/01/2015 (a)(d) 17,600
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Texas North Texas Higher Education Authority Incorporated, Student Loan Revenue
(concluded) Bonds, VRDN, AMT (a)(h):
$ 6,000 3.95% due 12/01/2032 $ 6,000
3,000 Refunding, 4% due 3/01/1999 3,000
27,900 Refunding, 4% due 3/01/2005 27,900
5,000 Refunding, Series A, 4% due 4/01/2020 5,000
29,000 Refunding, Series A, 4% due 4/01/2005 29,000
12,800 Series C, 4% due 4/01/2020 (e) 12,800
13,700 Series F, 4% due 4/01/2020 (e) 13,700
Panhandle Plains, Texas, Higher Education Authority Incorporated, Student
Loan Revenue Bonds, VRDN, AMT, Series A (a)(h):
9,000 4.10% due 6/01/2021 9,000
13,700 4.10% due 6/01/2025 13,700
4,700 Refunding, 4.10% 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, 4.25% due 4/01/2026 (a) 18,800
14,400 Port of Port Arthur, Texas, Navigational District, PCR, Refunding (Texaco Inc.
Project), VRDN, 4.15% due 10/01/2024 (a) 14,400
20,000 Port of Port Arthur, Texas, Navigational District Revenue Bonds (BASF Corp.
Project), VRDN, AMT, 4.30% due 4/01/2033 (a) 20,000
Sabine River Authority, Texas, PCR, VRDN (a)(e):
20,600 Refunding (Texas Utilities Project), Series A, 4.15% due 3/01/2026 20,600
15,900 (Texas Utilities Electric Co. Project), AMT, 4.25% due 3/01/2026 15,900
13,400 San Antonio, Texas, Higher Education Authority, Revenue Refunding Bonds
(Trinity University Project), VRDN, 4.05% due 4/01/2004 (a) 13,400
10,000 San Antonio, Texas, Hotel Occupancy Revenue Bonds, VRDN, Series SG-51, 4.12%
due 8/15/2019 (a)(f) 10,000
52,200 South Texas Higher Education Authority Incorporated, Student Loan Revenue
Refunding Bonds, VRDN, AMT, 4.10% due 12/01/2027 (a)(c)(h) 52,200
16,850 Southwest Texas, Higher Education Authority Incorporated, Revenue Refunding
Bonds (Southern Methodist University), VRDN, 4.15% due 7/01/2015 (a) 16,850
28,400 Texas State, Multi-Modal Water Development Board, VRDN, Series A, 4.20% due
3/01/2015 (a) 28,400
Texas State, Public Financial Authority Revenue Bonds:
10,000 CP, Series A, 3.65% due 10/13/1998 10,000
7,150 Refunding, 4% due 10/01/1998 7,150
36,500 Texas State, Refunding (Veterans' Housing Assistance Fund), VRDN, AMT, 4%
due 12/01/2016 (a) 36,500
92,000 Texas State, TRAN, 4.50% due 8/31/1999 92,881
22,770 Texas State (Tender Options Certificates), VRDN, 4.15% due 10/01/2008 (a) 22,770
23,400 Texas State, VRDN, Series A-59, 4.20% due 8/31/1999 (a) 23,400
21,200 Trinity River Authority, Texas, PCR (Texas Utilities Electric), VRDN, AMT,
Series 96A, 4.25% due 3/01/2026 (a)(e) 21,200
20,300 West Side Calhoun County, Texas, Development Corporation, PCR (Sohio
Chemical Company Project--Standard Oil), UPDATES, 4.20% 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, 4.25% due
4/01/2031 (a) 4,200
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONTINUED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
Utah--2.5% $ 54,900 Emery County, Utah, PCR, Refunding (Pacificorp Projects), VRDN, 4.15% due
11/01/2024 (a)(e) $ 54,900
Intermountain Power Agency, Utah, Power Supply Revenue Bonds:
25,000 CP, 3.60% due 2/11/1999 25,000
12,725 (Tender Option Certificates), VRDN, UT, 4.15% due 7/01/2006 (a) 12,725
6,180 Jordan, Utah, School District (Tender Option Certificates), VRDN, UT,
4.20% due 6/15/2007 (a) 6,180
Salt Lake County, Utah, PCR, Refunding (Service Station Holdings Project),
VRDN (a):
36,900 4.15% due 2/01/2008 36,900
31,205 Series B, 4.20% due 8/01/2007 31,205
21,500 Salt Lake County, Utah, TRAN, 4% due 12/31/1998 21,523
Utah State Board of Regents, Student Loan Revenue Bonds, VRDN, AMT (a)(e):
6,000 Series C, 4% due 11/01/2013 6,000
33,500 Series L, 4% due 11/01/2025 33,500
Vermont-- 1,100 Vermont Educational and Health Buildings Financing Agency Revenue Bonds
0.3% (VHA--New England), VRDN, Series G, 4% due 12/01/2025 (a)(e) 1,100
27,575 Vermont State Student Assistance Corporation, Student Loan Revenue Bonds,
VRDN, 3.50% due 1/01/2004 (a) 27,575
Virginia-- 8,885 Eagle Tax-Exempt Trust, Virginia, VRDN, Series 95, Class 4602, 4.07% due
0.8% 1/15/2013 (a) 8,885
51,000 Metropolitan Washington D.C. Airport Authority, Virginia, General Airport
Revenue Refunding Bonds, VRDN, AMT, Series C, 3.95% due 10/01/2027 (a) 51,000
16,000 Rockingham County, Virginia, IDA, PCR (Merck & Co. Inc. Project), VRDN,
Series A, 4.25% due 10/01/2020 (a) 16,000
Washington-- 16,300 Eagle Tax-Exempt Trust, Washington State, GO, VRDN, Series 1996-C, Class 4704,
3.6% 3.60% due 10/01/2015 (a) 16,300
30,200 Snohomish County, Washington, Public Utility District No. 001, Electric Revenue
Bonds (Generation System), VRDN, 4% 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), 4.10% due 10/01/2024 6,400
10,470 (Courtside Apartments Project), AMT, 4.10% due 1/01/2026 10,470
125,000 Washington State Public Power Supply System, Electric Revenue Refunding
Bonds, VRDN, Series 3A, 4% due 7/01/2018 (a)(c) 125,000
Washington State Public Power Supply System Revenue Bonds (Nuclear Project
No. 1), VRDN (Tender Option Certificates) (a):
18,990 4.20% due 7/01/2004 18,990
5,700 Refunding, Series 1A-1, 4% due 7/01/2017 5,700
23,485 Refunding, Series 1A-2, 4% due 7/01/2017 23,485
Washington State Public Power Supply System, Revenue Refunding Bonds
(Electric Project No. 2), VRDN (a)(c):
25,000 Series 2A-1, 3.45% due 7/01/2012 25,000
58,430 Series 2A-2, 4% due 7/01/2012 58,430
8,800 Yakima County, Washington, Public Corporation Revenue Bonds (Macro
Plastics Inc. Project), VRDN, AMT, 4.05% due 12/01/2026 (a) 8,800
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
SCHEDULE OF INVESTMENTS AS OF SEPTEMBER 30, 1998 (CONCLUDED) (IN THOUSANDS)
<CAPTION>
Face Value
State Amount Issue (Note 1a)
<S> <C> <S> <C>
West Virginia $ 11,220 Hancock County, West Virginia, County Commission, IDR, Refunding (The Boc
- --0.3% Group, Inc. Project), VRDN, 4% due 8/01/2005 (a) $ 11,220
13,600 Marshall County, West Virginia, PCR (Mountaineer Carbon Co.--BP Oil),
UPDATES, 4.20% due 12/01/2020 (a) 13,600
Wisconsin-- 5,165 Eagle Tax-Exempt Trust, Wisconsin, Housing and Economy Development
0.9% Bonds, VRDN, Series 94, Class 4901, 4.12% due 9/01/2015 (a) 5,165
6,090 Hartland, Wisconsin, IDR (Commercial Communications Inc.--Hegwood LLC
Project), VRDN, AMT, 4.15% due 8/01/2009 (a) 6,090
4,650 Langlade County, Wisconsin, BAN, 3.95% due 3/01/1999 4,653
19,000 Pleasant Prairie, Wisconsin, PCR, Refunding (Wisconsin Electric & Power Co.),
VRDN, Series C, 3.95% due 9/01/2030 (a) 19,000
16,000 Sheboygan, Wisconsin, PCR, Refunding (Wisconsin Power and Light Company
Project), VRDN, Series A, 4.10% due 9/01/2015 (a) 16,000
12,875 Waupun, Wisconsin, School District, BAN, 4.35% due 12/01/1998 12,884
14,500 Wisconsin State Health and Educational Facilities Authority Revenue Bonds
(Wheaton Franciscan Services), VRDN, 3.92% due 8/15/2016 (a) 14,500
Wyoming-- Lincoln County, Wyoming, PCR (a):
2.0% 13,000 (Exxon Project), DATES, Series A, 4.10% due 11/01/2014 13,000
7,700 (Exxon Project), VRDN, AMT, Series A, 4.15% due 7/01/2017 7,700
9,000 (Exxon Project), VRDN, AMT, Series B, 4.15% due 7/01/2017 9,000
10,960 Refunding (Pacificorp Projects), VRDN, 4.20% due 11/01/2024 (e) 10,960
Sublette County, Wyoming, PCR (Exxon Project) (a):
17,150 DATES, 4.10% due 11/01/2014 17,150
10,200 VRDN, AMT, Series B, 4.15% due 7/01/2017 10,200
Sweetwater County, Wyoming, PCR, Refunding, VRDN (a):
13,900 (Idaho Power Co. Project), Series C, 4.15% due 7/15/2026 13,900
18,000 (Pacificorp Project), 4% due 7/01/2015 18,000
12,000 (Pacificorp Project), 4.20% due 11/01/2024 (e) 12,000
Uinta County, Wyoming, PCR:
15,000 (Amoco Standard Oil Company Industry), Series A, 3.85% due 12/01/1998 15,000
57,550 Refunding (Chevron USA Inc. Project), VRDN, 4% due 8/15/2020 (a) 57,550
Total Investments (Cost--$9,089,338++)--100.0% 9,089,338
Other Assets Less Liabilities--0.0% 3,074
----------
Net Assets--100.0% $9,092,412
==========
<FN>
(a)The interest rate is subject to change periodically based on
certain indexes. The interest rate shown is the rate in effect at
September 30, 1998.
(b)Prerefunded.
(c)MBIA Insured.
(d)BIG Insured.
(e)AMBAC Insured.
(f)FGIC Insured.
(g)FSA Insured.
(h)SLMA Collateralized.
++Cost for Federal income tax purposes.
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENT OF ASSETS AND LIABILITIES AS OF SEPTEMBER 30, 1998
<S> <C> <C>
Assets:
Investments, at value (identified cost--$9,089,337,589)(Note 1a) $ 9,089,337,589
Cash 831,609
Interest receivable 47,752,708
Prepaid registration fees and other assets (Note 1d) 711,002
---------------
Total assets 9,138,632,908
---------------
Liabilities:
Payables:
Securities purchased $ 39,755,910
Investment adviser (Note 2) 2,978,494
Distributor (Note 2) 2,229,439
Beneficial interest redeemed 304 44,964,147
---------------
Accrued expenses and other liabilities 1,256,663
---------------
Total liabilities 46,220,810
---------------
Net Assets $ 9,092,412,098
===============
Net Assets Consist of:
Shares of beneficial interest, $0.10 par value, unlimited number of shares
authorized $ 909,410,917
Paid-in capital in excess of par 8,183,733,483
Accumulated realized capital losses--net (Note 4) (732,302)
---------------
Net Assets--Equivalent to $1.00 per share based on 9,094,109,173 shares of
beneficial interest outstanding $ 9,092,412,098
===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998
<S> <C> <C>
Investment Income (Note 1c):
Interest and amortization of premium and discount earned $ 166,836,007
Expenses:
Investment advisory fees (Note 2) $ 17,828,358
Distribution fees (Note 2) 5,761,792
Transfer agent fees (Note 2) 730,696
Registration fees (Note 1d) 513,452
Accounting services (Note 2) 195,120
Custodian fees 129,646
Printing and shareholder reports 51,484
Professional fees 47,565
Pricing fees 29,426
Trustees' fees and expenses 23,312
Other 47,555
---------------
Total expenses 25,358,406
---------------
Investment income--net 141,477,601
Realized Gain on Investments--Net (Note 1c) 167,763
---------------
Net Increase in Net Assets Resulting from Operations $ 141,645,364
===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
For the Six For the
Months Ended Year Ended
Increase (Decrease) in Net Assets: September 30, 1998 March 31, 1998
<S> <C> <C>
Operations:
Investment income--net $ 141,477,601 $ 266,097,242
Realized gain on investments--net 167,763 544,094
--------------- ---------------
Net increase in net assets resulting from operations 141,645,364 266,641,336
--------------- ---------------
Dividends to Shareholders (Note 1e):
Investment income--net (141,477,601) (266,025,682)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (141,477,601) (266,025,682)
--------------- ---------------
Beneficial Interest Transactions (Note 3):
Net proceeds from sale of shares 16,493,406,587 31,377,164,577
Net asset value of shares issued to shareholders in reinvestment of
dividends (Note 1e) 141,480,285 266,028,068
--------------- ---------------
16,634,886,872 31,643,192,645
Cost of shares redeemed (16,899,347,766) (30,634,380,592)
--------------- ---------------
Net increase (decrease) in net assets derived from beneficial interest
transactions (264,460,894) 1,008,812,053
--------------- ---------------
Net Assets:
Total increase (decrease) in net assets (264,293,131) 1,009,427,707
Beginning of period 9,356,705,229 8,347,277,522
--------------- ---------------
End of period $ 9,092,412,098 $ 9,356,705,229
=============== ===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA TAX-EXEMPT FUND
FINANCIAL HIGHLIGHTS
<CAPTION>
The following per share data and ratios have been derived For the Six
from information provided in the financial statements. Months Ended
September 30, For the Year Ended March 31,
Increase (Decrease) in Net Asset Value: 1998 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance:
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Investment income--net .02 .03 .03 .03 .03
---------- ---------- ---------- ---------- ----------
Less dividends from investment income--net (.02) (.03) (.03) (.03) (.03)
---------- ---------- ---------- ---------- ----------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Investment Return 3.08%* 3.16% 3.00% 3.31% 2.76%
========== ========== ========== ========== ==========
Ratios to Average Net Assets:
Expenses .55%* .55% .55% .55% .55%
========== ========== ========== ========== ==========
Investment income--net 3.05%* 3.11% 2.94% 3.26% 2.70%
========== ========== ========== ========== ==========
Supplemental Data:
Net assets, end of period (in thousands) $9,092,412 $9,356,705 $8,347,278 $8,164,160 $7,391,964
========== ========== ========== ========== ==========
<FN>
*Annualized.
See Notes to Financial Statements.
</TABLE>
CMA TAX-EXEMPT FUND
NOTES TO FINANCIAL STATEMENTS
1. Significant Accounting Policies:
CMA Tax-Exempt Fund (the "Fund") is registered under the Investment
Company Act of 1940 as a no-load, diversified, open-end management
investment company. 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.
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.
Financial Data Services, Inc. ("FDS"), 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, FDS, 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.
CMA TAX-EXEMPT FUND
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
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].
