CMA TAX-EXEMPT FUND
Semi-Annual Report
September 30, 2000
MERRILL LYNCH BULL LOGO
This report is not authorized for use as an offer of sale or a
solicitation of an offer to buy shares of the Fund unless
accompanied or preceded by the Fund's current prospectus. 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. Past performance results shown in this report should not be
considered a representation of future performance, which will
fluctuate. 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, 2000, CMA Tax-Exempt
Fund paid shareholders a net annualized yield of 3.67%*. As of
September 30, 2000, the Fund's 7-day yield was 4.34%.
Investment Environment
Data released during the six-month period ended September 30, 2000
showed an economy that was somewhat slower than in previous periods.
The rapid growth of the US economy during the last several years has
led the Federal Reserve Board to tighten monetary policy. Since June
1999 the Federal Reserve Board has raised short-term interest rates
on six separate occasions to their current level of 6.50%, with the
last move coming at the May 16, 2000 meeting when interest rates
were increased 50 basis points (0.50%). However, with the pace of
economic growth moderating this summer, investors began to perceive
that the end of the tightening cycle may be at hand. Additionally,
despite the dramatic rise in the price of oil, inflationary data
continues to remain benign and price pressures from a tight labor
market seem to be nonexistent. The fall in the price of technology
stocks has led to further speculation about the strength of the
economy going forward. This perception of a slowdown, combined with
the paydown of the Federal debt, has inverted the shape of the yield
curve. In this scenario, the yield on the three-month US Treasury
bill is currently greater than that of the yield on longer-term
securities.
Yields on short-term municipal securities did not experience the
same degree of inversion that took place over the period in the US
Treasury market. However, the yield curve remained fairly flat for
short-term municipal securities and even inverted for a brief period
as a result of heavier-than-expected tax-related redemptions in
April and May. These redemptions totaled approximately 10% of assets
as compared to an average of only 6% historically. However, once
these redemptions abated, the short-term municipal yield curve
regained a more normal shape by late June. After experiencing
redemptions in April and May, the industry recaptured these assets
in July and August, to end the last six months virtually unchanged
at just over $216 billion. New-issue supply for the period increased
77% to $22 billion from the $12.4 billion issued during the previous
six months. Much of this supply was issued in late June and July,
traditionally the heaviest time of new issuance as states and
municipalities enter the market to finance their annual budgetary
needs. Despite this increased issuance during the period, the
strength of the economy and subsequent rise in tax revenues actually
reduced the need for borrowing in some areas. Most notably, the
state of California, usually one of the largest borrowers in the
short-term tax-exempt market, did not issue any short-term debt this
fiscal year. This has kept the demand for one-year notes relatively
strong, which contributed to the flat yield curve. By the end of the
period, the yield on daily demand notes was 4.30%, virtually the
same as the yield on a one-year state of Texas note.
Investment Strategy
During most of the six-month period ended September 30, 2000, we
maintained the average portfolio maturity of CMA Tax-Exempt Fund in
the 30-day - 35-day range. This was done in light of the tight
monetary policy that was being conducted by the Federal Reserve
Board as well as on the belief that short-term municipal rates would
rise in April and May from tax-related redemptions. A modest
extension to the 35-day - 40-day range was conducted by period-end
as concerns over reduced issuance caused us to participate in
several note issues, most notably the state of Texas Tax and Revenue
Anticipation Notes that sold in late August. We adjusted the average
maturity through the use of tax-exempt commercial paper, which
allowed maturity diversification while offering principal safety and
attractive yields. This strategy proved beneficial to the Fund, as
it outperformed the average of its peer group, as measured by Lipper
Analytical Services. We anticipate maintaining this maturity range
as long as the flat yield curve does not offer any incentive to
extend. However, should the economy begin to slow dramatically and
the Federal Reserve Board give indications that it may reverse
policy, we would look to extend the average portfolio maturity to a
more aggressive stance. Credit quality and diversification remain
paramount as we seek to offer shareholders an attractive tax-exempt
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,
(Terry K. Glenn)
Terry K. Glenn
President and Trustee
(Vincent R. Giordano)
Vincent R. Giordano
Senior Vice President
(Peter J. Hayes)
Peter J. Hayes
Vice President and Portfolio Manager
October 31, 2000
*Based on a constant investment throughout the period, with
dividends compounded daily, and reflecting a net return to the
investor after all expenses.
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
FLOATS Floating Rate Securities
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
RAN Revenue Anticipation Notes
TAN Tax Anticipation Notes
TRAN Tax Revenue Anticipation Notes
UPDATES Unit Price Demand Adjustable Tax-Exempt
Securities
VRDN Variable Rate Demand Notes
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Alabama-- $40,000 Birmingham, Alabama, Special Care Facilities, Financing Authority, Revenue
2.6% Refunding Bonds (Ascension Health Credit), VRDN, Series B, 5.75% due
11/15/2039 (d) $ 40,000
Columbia, Alabama, IDB, PCR, Refunding (Alabama Power Company Project),
VRDN (d):
16,100 Series A, 5.50% due 5/01/2022 16,100
20,850 Series D, 5.60% due 10/01/2022 20,850
18,500 Mobile, Alabama, IDB, PCR, Refunding (Alabama Power Company Project),
VRDN, 5.50% due 6/01/2015 (d) 18,500
20,000 Parrish, Alabama, IDB, PCR, Refunding (Alabama Power Company Project),
VRDN, 5.50% due 6/01/2015 (d) 20,000
24,000 Stevenson, Alabama, IDB, Environmental Improvement Revenue Bonds
(Mead Corporation Project), VRDN, AMT, 5.60% due 1/01/2031 (d) 24,000
49,000 University of Alabama, University Hospital Revenue Bonds, VRDN, Series B,
5.55% due 9/01/2031 (a)(d) 49,000
57,100 West Jefferson, Alabama, IDB, PCR, Refunding (Alabama Power Company
Project), VRDN, 5.45% due 6/01/2028 (d) 57,100
Arizona-- 45,200 Apache County, Arizona, IDA, IDR (Tucson Electric Power Co.), VRDN,
2.7% Series 83-A, 5.60% due 12/15/2018 (d) 45,200
10,200 Arizona Educational Loan Marketing Corporation, Educational Loan Revenue
Bonds, VRDN, AMT, Series A, 5.55% due 3/01/2015 (d)(f) 10,200
Maricopa County, Arizona, PCR, Refunding, VRDN (d):
21,000 (Arizona Public Service Company), Series A, 5.35% due 5/01/2029 21,000
11,700 (Arizona Public Service Company), Series B, 5.50% due 5/01/2029 11,700
12,000 (Arizona Public Service Company), Series C, 5.50% due 5/01/2029 12,000
29,900 (Southern California Edison Company), Series A, 5.50% due 6/01/2035 29,900
16,300 Salt Lake City, Utah, Pooled Revenue Bonds (Hospital Financing Program), CP,
4.15% due 10/11/2000 16,300
Salt River Project, Arizona, Agriculture Improvement and Power District,
Electric System Revenue, CP:
21,581 4.25% due 10/10/2000 21,581
14,506 4.15% due 11/09/2000 14,506
21,470 4.20% due 12/07/2000 21,470
30,985 4.25% due 12/08/2000 30,985
7,600 Tempe, Arizona, Excise Tax Revenue Bonds, VRDN, 5.50% due 7/01/2023 (d) 7,600
15,800 University of Arizona, COP (Student Union Bookstore), VRDN, Series B,
5.40% due 6/01/2024 (a)(d) 15,800
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Arkansas-- $ 43,100 North Little Rock, Arkansas, Health Facilities Board, Health Care Revenue
0.5% Bonds (Baptist Health), VRDN, Series B, 5.55% due 12/01/2021 (d)(f) $ 43,100
California-- California Higher Education Loan Authority Incorporated, Student Loan
1.2% Revenue Refunding Bonds:
42,850 Senior Lien, Series A-1, 4.40% due 7/01/2001 42,850
29,600 VRDN, Series A, 5.45% due 6/01/2001 (d) 29,600
39,250 Sonoma County, California, TRAN, 4% due 11/01/2000 39,270
Colorado-- 62,900 Colorado State General Fund, GO, TRAN, Series B, 5% due 6/27/2001 63,201
0.9% 10,500 Denver, Colorado, City and County Airport Revenue Bonds, VRDN, AMT,
Series F, 5.55% due 11/15/2025 (d) 10,500
Pitkin County, Colorado, IDR, Refunding (Aspen Skiing Company Project),
VRDN (d):
6,500 AMT, Series B, 5.65% due 4/01/2014 6,500
3,500 Series A, 5.50% due 4/01/2016 3,500
Connecticut-- 20,000 Connecticut State Special Assessment, Unemployment Compensation Advisory
0.6% Fund Revenue Bonds (Connecticut Unemployment), Series C, 4.35% due
7/01/2001 (c) 20,000
Eagle Tax-Exempt Trust, Connecticut, VRDN, Class 0701 (d):
13,200 Series 94, 4.80% due 8/15/2012 13,200
24,750 Series 96, 4.24% due 11/15/2004 24,750
Delaware-- ABN Amro Munitops Certificates Trust:
1.4% 29,185 CP, Series 1999-15, 4.45% due 10/01/2000 (f) 29,185
15,750 VRDN, AMT, Series 1998-15, 5.80% due 7/05/2006 (c)(d) 15,750
20,000 VRDN, Series 1998-16, 5.70% due 10/04/2006 (d)(f) 20,000
13,500 VRDN, Series 1998-22, 5.69% due 1/03/2007 (d)(f) 13,500
29,950 VRDN, Series 1999-10, 5.69% due 3/07/2007 (d) 29,950
10,695 VRDN, Series 2000-12, 4.40% due 6/04/2008 (d)(f) 10,695
Delaware State, GO, Series A:
4,000 4.25% due 3/01/2001 3,997
7,500 5% due 4/01/2001 7,528
District of District of Columbia, GO (General Fund Recovery), VRDN (d):
Columbia-- 9,300 Series B-1, 5.60% due 6/01/2003 9,300
0.4% 8,200 Series B-2, 5.60% due 6/01/2003 8,200
17,350 District of Columbia, GO, Refunding, MSTR, VRDN, Series SGA-62, 5.60% due
6/01/2017 (a)(d) 17,350
Florida-- 13,885 Broward County, Florida, Professional Sports Facilities, Tax Revenue Bonds,
4.4% MSTR, VRDN, Series SGA-38, 5.70% due 9/01/2021 (d)(f) 13,885
12,000 Capital Projects Finance Authority, Florida, Revenue Bonds (Florida Hospital
Association-Capital Projects Loan), VRDN, Series A, 5.50% due 6/01/2028 (d)(e) 12,000
50,240 Dade County, Florida, Water and Sewer System Revenue Bonds, VRDN,
5.40% due 10/05/2022 (c)(d) 50,240
7,500 Gulf Breeze, Florida, Local Government Revenue Bonds, VRDN, Series E,
5.60% due 12/01/2020 (c)(d) 7,500
37,505 Hillsborough County, Florida, IDA, PCR, Refunding (Tampa Electric Company
Project), VRDN, 5.35% due 9/01/2025 (d) 37,505
Jacksonville, Florida, Electric Authority Revenue Bonds:
40,000 CP, Series C-1, 4.20% due 10/06/2000 40,000
13,200 (Electric System), VRDN, Sub-Series A, 5.50% due 10/01/2010 (d) 13,200
82,600 (Electric System), VRDN, Sub-Series B, 5.60% due 10/01/2010 (d) 82,600
10,100 (Electric System), VRDN, Sub-Series C, 5.60% due 10/01/2010 (d) 10,100
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Florida-- $ 33,365 Jacksonville, Florida, Health Facilities Authority, Hospital Revenue Refunding
(concluded) Bonds (Charity Obligation Group), VRDN, Series C, 5.40% due 8/15/2019 (d)(f) $ 33,365
4,715 Jacksonville, Florida, Revenue Bonds (YMCA Florida First Coast Project),
VRDN, 5.40% due 3/01/2018 (d) 4,715
12,700 Manatee County, Florida, PCR, Refunding (Florida Power & Light Company
Project), VRDN, 5.50% due 9/01/2024 (d) 12,700
33,800 Martin County, Florida, PCR, Refunding (Florida Power & Light Company
Project), VRDN, 5.50% due 7/15/2022 (d) 33,800
25,000 Orange County, Florida, Health Facilities Authority Revenue Bonds (Florida
Hospital Association-Health), VRDN, Series A, 5.60% due 6/01/2030 (d) 25,000
Saint Lucie County, Florida, PCR, Refunding (Florida Power & Light Company
Project), VRDN (d):
5,500 5.50% due 1/01/2026 5,500
7,400 5.40% due 3/01/2027 7,400
23,735 Sunshine, Florida, State Governmental Financing Commission Revenue Bonds,
VRDN, 5.55% due 7/01/2016 (a)(d) 23,735
Georgia-- 43,500 Bartow County, Georgia, Development Authority, PCR, Refunding (Georgia
7.0% Power Company Plant-Bowen Project), VRDN, 5.50% due 3/01/2024 (d) 43,500
Burke County, Georgia, Development Authority, PCR (Georgia Power Company
Plant-Vogtle Project), VRDN (d):
17,450 5.50% due 9/01/2026 17,450
8,400 4th Series, 5.60% due 7/01/2024 8,400
Burke County, Georgia, Development Authority, PCR, Refunding (Georgia
Power Company Plant-Vogtle Project), VRDN (d):
11,600 AMT, 5.55% due 9/01/2034 11,600
39,700 2nd Series, 5.50% due 4/01/2025 39,700
10,085 3rd Series, 5.50% due 9/01/2025 10,085
Cobb County, Georgia, GO:
85,000 School District, 4.375% due 12/29/2000 85,084
60,000 TAN, 4.35% due 12/29/2000 60,033
12,475 Coweta County, Georgia, Development Authority, PCR, Refunding (Georgia
Power Company Plant-Yates Project), VRDN, 5.45% due 3/01/2024 (d) 12,475
32,000 De Kalb County, Georgia, School District, GO, TAN, 4.25% due 12/28/2000 31,986
79,000 Fulton County, Georgia, School District, GO, Construction Sales, TAN,
4.40% due 12/29/2000 79,061
85,000 Gwinnett County, Georgia, School District, GO, Construction Sales Tax Notes,
4.45% due 12/29/2000 85,097
26,300 Heard County, Georgia, Development Authority, PCR, Refunding (Georgia
Power Company Plant-Wansley), VRDN, 5.45% due 9/01/2029 (d) 26,300
Monroe County, Georgia, Development Authority, PCR, Refunding (Georgia
Power Company Plant-Scherer), VRDN (d):
17,500 5.45% due 9/01/2029 17,500
35,800 First Series, 5.50% due 7/01/2025 35,800
Municipal Electric Authority, Georgia, Revenue Refunding Bonds (Project One),
VRDN (d):
5,400 Series B, 5.40% due 1/01/2016 5,400
18,157 Sub-Series E, 5.55% due 1/01/2026 18,157
Putnam County, Georgia, Development Authority, PCR, Refunding (Georgia
Power Company Plant Project), VRDN (d):
13,725 5.45% due 3/01/2024 13,725
14,800 5.60% due 4/01/2032 14,800
26,400 First Series, 5.60% due 6/01/2023 26,400
16,600 Second Series, 5.50% due 9/01/2029 16,600
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Illinois-- Chicago, Illinois, GO:
10.2% $ 90,000 Series A, 3.90% due 12/07/2000 $ 90,000
110,255 Tender Notes, 4% due 10/26/2000 110,255
16,345 VRDN, Series B, 5.40% due 1/01/2012 (d) 16,345
7,000 Chicago, Illinois, IDR (Enterprise Center VIII Project), VRDN, AMT, 5.67% due
6/01/2022 (d) 7,000
33,000 Chicago, Illinois, Midway Airport Revenue Bonds, Second Lien, VRDN, AMT,
Series A, 5.55% due 1/01/2029 (d)(f) 33,000
Chicago, Illinois, O'Hare International Airport Revenue Bonds (American
Airlines), DATES (d):
20,200 Series A, 5.50% due 12/01/2017 20,200
32,700 Series B, 5.50% due 12/01/2017 32,700
23,500 Series C, 5.50% due 12/01/2017 23,500
18,200 Series D, 5.50% due 12/01/2017 18,200
6,030 Chicago, Illinois, O'Hare International Airport Revenue Bonds (General Airport
Second Lien), VRDN, Series B, 5.55% due 1/01/2015 (d) 6,030
14,800 Chicago, Illinois, O'Hare International Airport, Special Facilities Revenue Bonds
(Compagnie Nationale-Air France), VRDN, AMT, 5.60% due 5/01/2018 (d) 14,800
20,000 Chicago, Illinois, Revenue Bonds (Homestart Program), VRDN, Series A,
5.60% due 6/01/2005 (d) 20,000
Eagle Tax-Exempt Trust, Chicago, Illinois, GO, VRDN (d):
14,380 Series 95, Class 1301, 4.44% due 1/01/2024 14,380
19,800 Series 96C, Class 1302, 4.80% due 1/01/2012 19,800
9,900 Series 98, Class 1301, 4.44% due 1/01/2017 9,900
14,355 Eagle Tax-Exempt Trust, Illinois Metropolitan Expo Center, VRDN, Series 98,
Class 1306, 4.80% due 6/15/2029 (d) 14,355
36,300 Illinois Development Finance Authority, PCR, Refunding (Commonwealth
Edison Company Project), VRDN, Series B, 5.45% due 10/15/2014 (d) 36,300
Illinois Development Finance Authority, Revenue Refunding Bonds, VRDN (d):
6,000 (Olin Corporation Project), Series A, 5.45% due 6/01/2004 6,000
41,500 (Provena Health), Series B, 5.80% due 5/01/2028 (f) 41,500
Illinois Educational Facilities Authority Revenue Bonds:
30,000 (The Art Institute of Chicago-Reserve), CP, Series A-1, 4.55% due 10/12/2000 30,000
20,000 (The Art Institute of Chicago-Reserve), CP, Series A-2, 4.60% due 11/30/2000 20,000
4,900 (Chicago Historical Society), VRDN, 5.50% due 12/01/2025 (d) 4,900
17,800 Illinois Educational Facilities Authority, Revenue Refunding Bonds
(Northwestern University), VRDN, 5.55% due 12/01/2025 (d) 17,800
Illinois Health Facilities Authority Revenue Bonds:
22,000 (Evanston Hospital Corporation), 3.90% due 10/31/2000 22,000
10,000 (Evanston Hospital Corporation), Series B, 4% due 11/30/2000 10,000
10,000 (Evanston Hospital Corporation), Series C, 4% due 11/30/2000 10,000
10,000 (Evanston Hospital Corporation), Series D, 4% due 11/30/2000 10,000
3,800 (Northwestern Memorial Hospital), VRDN, 5.50% due 8/15/2025 (d) 3,800
50,000 Revolving Fund, Pooled, VRDN, Series B, 5.55% due 8/01/2020 (d) 50,000
7,000 Revolving Fund, Pooled, VRDN, Series F, 5.55% due 8/01/2015 (d) 7,000
Illinois Health Facilities Authority, Revenue Refunding Bonds, VRDN (d):
17,590 (Advocate Health Care), Series B, 5.60% due 8/15/2022 17,590
19,275 (Little Company of Mary Hospital), Series A, 5.60% due 8/15/2021 (f) 19,275
61,450 (Resurrection Health), Series A, 5.55% due 5/01/2029 (e) 61,450
55,445 (University of Chicago Hospitals), 5.50% due 8/01/2026 (f) 55,445
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Illinois $ 12,000 Illinois State, GO, VRDN, 4.75% due 4/01/2001 (d) $ 12,029
(concluded) 18,815 Illinois State, VRDN, Series SG-60, 5.62% due 8/01/2019 (d) 18,815
4,600 Illinois Student Assistance Commission, Student Loan Revenue Bonds, VRDN,
AMT, Series A, 5.65% due 3/01/2006 (d) 4,600
21,350 Regional Transportation Authority, Illinois, FLOATS, Series SG-82, 5.62% due
6/01/2025 (d) 21,350
Southwestern Illinois Development Authority, Solid Waste Disposal Revenue
Bonds (Shell Oil Company-Wood River Project), VRDN, AMT (d):
11,100 5.65% due 8/01/2021 11,100
10,600 5.65% due 4/01/2022 10,600
7,000 Will County, Illinois, Exempt Facilities Revenue Bonds (Amoco Company
Project), VRDN, AMT, 5.65% due 3/01/2028 (d) 7,000
Indiana-- 2,950 Elkhart County, Indiana, Mortgage Revenue Bonds (Hubbard Hill Estates),
6.0% VRDN, Series A, 4.44% due 7/01/2027 (d) 2,950
Fort Wayne, Indiana, Hospital Authority, Hospital Revenue Bonds (Parkview
Memorial Hospital), VRDN (d):
1,645 Series B, 5.40% due 1/01/2016 1,645
2,700 Series B, 5.40% due 1/01/2020 2,700
3,505 Series C, 5.40% due 1/01/2016 3,505
5,670 Series D, 5.40% due 1/01/2016 5,670
5,800 Hammond, Indiana, PCR, Refunding (Amoco Oil Company Project), VRDN,
5.45% due 2/01/2022 (d) 5,800
130,000 Indiana Bond Bank, Advanced Funding Program Notes, Series A-2, 4.75% due
1/18/2001 130,218
15,000 Indiana Health Facilities Financing Authority, Hospital Revenue Bonds
(Community Hospitals Project), VRDN, Series A, 5.65% due 7/01/2027 (d) 15,000
Indiana Health Facilities Financing Authority, Hospital Revenue Refunding
Bonds (Clarian Health Partners), VRDN (d):
46,500 Series B, 5.75% due 2/15/2026 46,500
50,800 Series C, 5.75% due 2/15/2026 50,800
7,050 Indiana Health Facilities Financing Authority Revenue Bonds (Capital Access
Designated Pool), VRDN, 5.85% due 1/01/2012 (d) 7,050
173,800 Indiana Health Facilities Financing Authority, Revenue Refunding Bonds
(Ascension Health Credit), VRDN, Series B, 5.75% due 11/15/2039 (d) 173,800
36,980 Indiana Secondary Market Educational Loans Inc., Educational Loan Revenue
Bonds, VRDN, AMT, Series B, 5.50% due 12/01/2014 (a)(d) 36,980
33,000 Indiana State Development Finance Authority, Environmental Revenue
Refunding and Improvement Bonds (USX Corporation Project), CP, 4.05% due
10/05/2000 33,000
9,400 Princeton, Indiana, PCR, Refunding (PSI Energy Incorporated Project), VRDN,
5.40% due 4/01/2022 (d) 9,400
8,200 Purdue University, Indiana, University Revenue Bonds (Student Fee), VRDN,
Series O, 5.80% due 7/01/2019 (d) 8,200
Rockport, Indiana, PCR, Refunding (AEP Generating Company Project),
VRDN (a)(d):
14,200 Series A, 5.50% due 7/01/2025 14,200
7,900 Series B, 5.40% due 7/01/2025 7,900
7,600 Whiting, Indiana, Industrial Sewer and Solid Waste Disposal Revenue Refunding
Bonds (Amoco Oil Company Project), VRDN, AMT, 5.70% due 1/01/2026 (d) 7,600
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Iowa--0.9% Iowa Finance Authority, Solid Waste Disposal Revenue Bonds (Cedar River
Paper Company Project), VRDN, AMT (d):
$ 4,730 5.55% due 3/01/2033 $ 4,730
66,400 Series A, 5.55% due 7/01/2023 66,400
14,500 Iowa Student Loan Liquidity Corporation, Student Loan Revenue Bonds,
VRDN, AMT, Series B, 5.50% due 12/01/2013 (a)(d) 14,500
Kansas-- 9,100 Butler County, Kansas, Solid Waste Disposal Facilities Revenue Bonds (Texaco
0.3% Refining and Marketing), VRDN, AMT, Series A, 5.70% due 8/01/2024 (d) 9,100
17,500 Kansas State Development Finance Authority, Health Facilities Revenue Bonds
(Stormont-Vail), VRDN, Series M, 5.65% due 11/15/2023 (d)(f) 17,500
Kentucky-- 5,100 Ashland, Kentucky, PCR, Refunding (Calgon Carbon Corporation Project),
3.5% VRDN, Series A, 5.75% due 10/01/2006 (d) 5,100
22,700 Carroll County, Kentucky, Collateralized Solid Waste Disposal Facilities
Revenue Bonds (Kentucky Utilities Company Project), VRDN, AMT, Series A,
5.75% due 11/01/2024 (d) 22,700
Daviess County, Kentucky, Solid Waste Disposal Facility Revenue Bonds (Scott
Paper Company Project), VRDN, AMT (d):
44,100 Series A, 5.75% due 12/01/2023 44,100
16,300 Series A, 5.75% due 5/01/2024 16,300
26,200 Series B, 5.75% due 12/01/2023 26,200
21,700 Series B, 5.75% due 5/01/2024 21,700
Kentucky Asset/Liability Commission, General Fund Revenue Notes, TRAN:
55,000 Series A, 5.25% due 6/27/2001 55,277
33,000 Series B, 5% due 6/27/2001 33,159
19,655 Kentucky Economic Development Finance Authority, Hospital Facilities
Revenue Refunding Bonds (Baptist Healthcare), VRDN, Series C, 5.50% due
8/15/2031 (d)(f) 19,655
44,896 Kentucky Interlocal School Transportation Association, COP, TRAN, 5% due
6/29/2001 45,082
38,300 Kentucky State Pollution Abatement and Water Resource Finance Authority
Revenue Bonds (Toyota Motors), VRDN, AMT, 6% due 8/13/2006 (d) 38,300
Louisiana-- 5,100 Ascension Parish, Louisiana, PCR, Refunding (Shell Oil Company Project),
4.3% VRDN, 5.50% due 9/01/2023 (d) 5,100
17,700 Ascension Parish, Louisiana, Revenue Bonds (BASF Corporation Project),
VRDN, AMT, 5.55% due 3/01/2025 (d) 17,700
31,500 Calcasieu Parish, Louisiana, IDB, Environmental Revenue Refunding Bonds
(Citgo Petroleum Corp.), VRDN, AMT, 5.70% due 3/01/2025 (d) 31,500
9,760 Eagle Tax-Exempt Trust, Louisiana, VRDN, Series 94, Class 1803, 4.44% due
5/01/2008 (d) 9,760
East Baton Rouge Parish, Louisiana, PCR, Refunding (Exxon Project), VRDN (d):
19,800 5.40% due 11/01/2019 19,800
35,150 5.50% due 3/01/2022 35,150
2,700 East Baton Rouge Parish, Louisiana, Solid Waste Revenue Bonds (Exxon
Project), VRDN, AMT, 5.45% due 12/01/2028 (d) 2,700
25,000 Jefferson Parish, Louisiana, Hospital Service District Number 001, Hospital
Revenue Bonds (West Jefferson Medical Center), VRDN, Series B, 5.55% due
1/01/2028 (d)(e) 25,000
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Louisiana Louisiana Public Facilities Authority, Hospital Revenue Bonds (Willis-Knighton
(concluded) Medical Center Project), VRDN (a)(d):
$ 49,800 5.40% due 9/01/2025 $ 49,800
30,500 5.40% due 9/01/2027 30,500
Louisiana Public Facilities Authority Revenue Bonds (Christus Health System),
CP, Series B:
36,000 4.50% due 10/11/2000 36,000
30,000 4.50% due 11/13/2000 30,000
Louisiana State Offshore Terminal Authority, Deepwater Port Revenue
Refunding Bonds (First Stage A-Loop Inc.) (d):
17,950 ACES, 5.35% due 9/01/2006 17,950
10,000 VRDN, 5.35% due 9/01/2008 10,000
24,200 Plaquemines Parish, Louisiana, Environmental Revenue Bonds (BP Exploration &
Oil), VRDN, AMT, 5.65% due 10/01/2024 (d) 24,200
4,400 Saint Charles Parish, Louisiana, PCR, Refunding (Shell Oil Company Project),
VRDN, 5.30% due 6/01/2005 (d) 4,400
Saint Charles Parish, Louisiana, PCR (Shell Oil Company Project),
VRDN, AMT (d):
24,400 5.65% due 11/01/2021 24,400
21,000 Series A, 5.65% due 10/01/2022 21,000
4,400 South Louisiana Port Commission, Port Revenue Refunding Bonds (Occidental
Petroleum), VRDN, 5.40% due 7/01/2018 (d) 4,400
Maryland-- 30,000 Anne Arundel County, Maryland, CP, Series B, 4.25% due 12/14/2000 30,000
1.5% 35,700 Baltimore, Maryland, Port Facilities Revenue Bonds (Occidental Petroleum),
VRDN, 4.15% due 10/14/2011 (d) 35,700
11,570 Maryland State and Local Facilities Loan, GO, Second Series, 4.75% due
8/01/2001 11,618
10,000 Maryland State Energy Financing Administration, Solid Waste Disposal
Revenue Bonds (Cimenteries Project), VRDN, AMT, 5.70% due 5/01/2035 (d) 10,000
20,000 Maryland State Health and Higher Educational Facilities Authority Revenue
Bonds (University of Maryland Medical System), VRDN, 5.55% due
7/01/2024 (d) 20,000
12,250 Maryland State Health and Higher Educational Facilities Authority, Revenue
Refunding Bonds (Pooled Loan Program), VRDN, Series B, 5.40% due
4/01/2035 (d) 12,250
25,000 Montgomery County, Maryland, BAN, CP, 4.15% due 10/11/2000 25,000
Massachusetts 18,000 Massachusetts State, GO, BAN, Series A, 5% due 9/06/2001 18,113
--1.5% Massachusetts State Health and Educational Facilities Authority Revenue
Bonds:
10,000 (Brigham and Womens Hospital Issue), Series D, 6.75% due 7/01/2001 (g) 10,315
16,400 (Partners Healthcare System), VRDN, Series P-1, 5.45% due 7/01/2027 (d)(e) 16,400
6,300 Massachusetts State Health and Educational Facilities Authority, Revenue
Refunding Bonds (Capital Asset Program), VRDN, Series B, 5.40% due
7/01/2010 (d)(f) 6,300
Massachusetts State Water Resource Authority, Revenue Refunding Bonds,
VRDN (c)(d):
20,000 Sub-Series B, 5.50% due 8/01/2037 20,000
60,200 Sub-Series D, 5.50% due 11/01/2026 60,200
10,000 Pioneer Valley Transit Authority, Massachusetts, GO, RAN, 4.875% due
8/03/2001 10,026
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
Face
State Amount Issue Value
<S> <C> <S> <C>
Michigan-- $ 16,900 Grand Rapids, Michigan, Water Supply Revenue Refunding Bonds, VRDN,
2.3% 5.50% due 1/01/2020 (c)(d) $ 16,900
8,460 Holly, Michigan, Area School District, VRDN, Series SG-50, 5.62% due
5/01/2020 (d) 8,460
Kent Hospital Finance Authority, Michigan, Revenue Refunding Bonds
(Spectrum Health), VRDN (d)(f):
24,200 Series B, 5.40% due 1/15/2026 24,200
26,800 Series C, 5.40% due 1/15/2026 26,800
7,500 Michigan State, COP (New Center Development), 4.75% due 3/01/2001 7,515
14,345 Michigan State Strategic Fund, Limited Obligation Revenue Bonds, VRDN,
Reserve 1, 5.40% due 9/01/2030 (d) 14,345
11,600 Michigan State Strategic Fund, Limited Obligation Revenue Refunding Bonds
(Consumers Power Company Project), VRDN, Series A, 5.50% due
6/15/2010 (a)(d) 11,600
13,900 Michigan State Strategic Fund, PCR, Refunding (Consumers Power Company
Project), VRDN, 5.50% due 4/15/2018 (a)(d) 13,900
17,300 Monroe County, Michigan, Economic Development Corporation, Limited
Obligation Revenue Refunding Bonds (Detroit Edison), VRDN, Series CC,
5.50% due 10/01/2024 (d) 17,300
16,505 Municipal Securities Trust Certificates, Revenue Refunding Bonds (Michigan
State Hospital), VRDN, Series 1997-24, Class A, 5.70% due 12/01/2005 (d)(e) 16,505
Royal Oak, Michigan, Hospital Finance Authority, Hospital Revenue Bonds
(William Beaumont Hospital), VRDN (d):
11,300 Series J, 5.50% due 1/01/2003 11,300
23,700 Series L, 5.50% due 1/01/2027 23,700
20,600 University of Michigan, University Hospital Revenue Bonds, VRDN, Series A,
5.40% due 12/01/2027 (d) 20,600
Minnesota-- 46,825 Eagle Tax-Exempt Trust, Minnesota, GO, VRDN, Series 1993-A, 5.62% due
0.9% 8/01/2003 (d) 46,825
10,000 Minnesota State, Revenue Bonds, Series A, 5% due 6/30/2001 (a) 10,046
32,000 Rochester, Minnesota, Health Care Facilities Revenue Refunding Bonds
(Mayo Foundation), CP, Series B, 4.25% due 11/13/2000 32,000
Mississippi-- 7,000 Jackson County, Mississippi, Industrial Sewer Facilities Revenue Bonds
0.1% (Chevron U.S.A. Inc. Project), VRDN, AMT, 5.65% due 12/15/2024 (d) 7,000
Missouri-- Missouri Higher Education Loan Authority, Student Loan Revenue Bonds,
0.3% VRDN, AMT (d):
7,800 Series A, 5.50% due 6/01/2017 7,800
20,000 Series B, 5.50% due 6/01/2020 20,000
Nebraska-- NebHelp Inc., Nebraska, Revenue Bonds (Student Loan Program), VRDN (d):
0.1% 3,550 AMT, Series A, 5.55% due 12/01/2016 3,550
3,100 Series C, 5.45% due 12/01/2015 (f) 3,100
Nevada--0.9% 74,915 Clark County, Nevada, Airport Improvement Revenue Refunding Bonds, VRDN,
Series A, 5.40% due 7/01/2012 (d)(f) 74,915
6,955 Nevada Housing Division Revenue Bonds (Multi-Unit Housing-Mesquite),
VRDN, AMT, Series B, 4.40% due 5/01/2028 (d) 6,955
New 7,415 New Hampshire State Business Finance Authority, Resource Recovery Revenue
Hampshire-- Refunding Bonds (Wheelabrator), VRDN, Series A, 5.60% due 1/01/2018 (d) 7,415
0.1% 5,500 New Hampshire State, HFA, M/F Housing Revenue Bonds (P.R.A. Properties-
Pheasant Run Project), VRDN, AMT, 5.90% due 5/01/2025 (d) 5,500
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
New Jersey-- $ 7,000 Bayonne, New Jersey, GO, TAN, 5% due 10/01/2001 $ 7,034
0.8% 27,300 Eagle Tax-Exempt Trust, New Jersey, VRDN, Series 96, Class 3001, 4.80% due
2/15/2007 (d) 27,300
13,746 East Brunswick Township, New Jersey, GO, BAN, 4.50% due 7/27/2001 13,752
20,000 Essex County, New Jersey, GO, TAN, 5% due 11/21/2000 20,016
2,500 New Jersey EDA, Water Facilities Revenue Refunding Bonds (United Water of
New Jersey Inc. Project), VRDN, Series A, 5.45% due 11/01/2026 (a)(d) 2,500
New Mexico-- 27,600 Farmington, New Mexico, PCR (Arizona Public Service Company), VRDN, AMT,
0.7% Series C, 5.45% due 9/01/2024 (d) 27,600
7,800 Hurley, New Mexico, PCR (Kennecott Santa Fe), UPDATES, 5.45% due
12/01/2015 (d) 7,800
31,500 New Mexico State Hospital Equipment Loan, Council Revenue Refunding Bonds
(Catholic Health), VRDN, Series B, 5.50% due 12/01/2022 (d) 31,500
New York-- 24,700 Eagle Tax-Exempt Trust, New York State (Memorial Sloan-Kettering), VRDN,
3.3% Series 98, 5.64% due 7/01/2023 (d) 24,700
24,900 Long Island Power Authority, New York, Electric System Revenue Bonds,
VRDN, Sub-Series 7-A, 5.20% due 4/01/2025 (d)(f) 24,900
21,300 Metropolitan Transportation Authority, New York, Transit Facilities Revenue
Bonds, CP, Series 1, 4.20% due 10/27/2000 21,300
New York City, New York, City Municipal Water Finance Authority:
30,000 GO, CP, Series 4, 4.25% due 10/04/2000 30,000
3,700 Water and Sewer System Revenue Bonds, VRDN, Series C, 5.40% due
6/15/2022 (c)(d) 3,700
New York City, New York, GO, VRDN (d):
14,000 Series B, Sub-Series B-2, 5.40% due 8/15/2003 (f) 14,000
5,000 Series B, Sub-Series B-3, 5.40% due 8/15/2004 (f) 5,000
3,000 Sub-Series A-7, 5.50% due 8/01/2019 3,000
New York City, New York, Municipal Water Finance Authority, Water and
Sewer System Revenue Refunding Bonds, VRDN (d):
25,400 Series G, 5.35% due 6/15/2024 (c) 25,400
21,500 Series SGB-27, 5.54% due 6/15/2024 (e) 21,500
3,300 New York City, New York, Transitional Finance Authority Revenue Bonds,
Future Tax Secured, VRDN, Sub-Series B-2, 5.35% due 11/01/2026 (d) 3,300
6,900 New York State Dormitory Authority, Revenue Refunding Bonds (Memorial
Sloan-Kettering), VRDN, Series A, 5.45% due 7/01/2019 (d) 6,900
4,700 New York State Energy Research and Development Authority, PCR, Refunding
(Niagara Mohawk Power Corporation), VRDN, Series C, 5.45% due
12/01/2025 (d) 4,700
13,800 New York State Local Assistance Corporation Revenue Bonds, VRDN, Series A,
5.50% due 4/01/2022 (d) 13,800
New York State Power Authority, Revenue and General Purpose Bonds:
51,475 4.30% due 9/04/2001 51,475
30,435 GO, 4.20% due 9/04/2001 30,394
16,350 New York State Thruway Authority Revenue Bonds, VRDN, 5.45% due
1/01/2024 (c)(d) 16,350
5,500 Port Authority of New York and New Jersey, Special Obligation, Revenue
Refunding Bonds (Versatile Structure Obligation), VRDN, Series 5, 5.40% due
8/01/2024 (d) 5,500
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
North $ 51,120 Charlotte, North Carolina, Airport Revenue Bonds, VRDN, Series D, 5.40% due
Carolina-- 7/01/2029 (d)(f) $ 51,120
1.1% 15,270 North Carolina Medical Care Commission, Health Care Facilities Revenue
Bonds (Cabarrus Memorial Hospital Project), VRDN, 5.55% due 3/01/2012 (d) 15,270
1,500 North Carolina Medical Care Commission, Hospital Revenue Bonds (Pooled
Financing Project), ACES, Series A, 5.35% due 10/01/2020 (d) 1,500
25,000 North Carolina Medical Care Commission, Hospital Revenue Refunding Bonds
(Baptist Hospitals Project), VRDN, 5.55% due 6/01/2030 (d) 25,000
8,500 North Carolina Medical Care Commission Revenue Bonds (Carol Woods
Project), VRDN, 5.45% due 4/01/2021 (d) 8,500
Ohio--2.0% 15,000 Cuyahoga County, Ohio, Hospital Revenue Bonds (The Cleveland Clinic),
VRDN, Series D, 5.50% due 1/01/2026 (d) 15,000
22,275 Eagle Tax-Exempt Trust, Ohio State Turnpike, VRDN, Series 98, Class 3503,
4.80% due 2/15/2026 (d) 22,275
10,500 Eagle Tax-Exempt Trust, Ohio, VRDN, Series 95, Class 3502, 5.62% due
7/01/2015 (d) 10,500
17,365 Franklin County, Ohio, Hospital Revenue Refunding and Improvement Bonds
(U.S. Health Corporation), VRDN, Series A, 5.52% due 12/01/2021 (d) 17,365
24,950 Montgomery County, Ohio, Revenue Bonds (Miami Valley Hospital), CP,
Series B, 4.35% due 12/06/2000 24,950
46,700 Montgomery County, Ohio, Revenue Refunding Bonds (Miami Valley Hospital),
VRDN, Series A, 5.50% due 11/15/2022 (d) 46,700
1,865 Ohio HFA, M/F Housing Revenue Bonds (Kenwood Congregate-Retire), VRDN,
4.25% due 12/01/2015 (d) 1,865
19,000 Ohio State Air Quality Development Authority, PCR, Refunding (Toledo Edison
Company Project), VRDN, Series A, 5.35% due 4/01/2024 (d) 19,000
12,300 Ohio State Air Quality Development Authority Revenue Bonds, VRDN, Series B,
5.35% due 12/01/2015 (d) 12,300
10,100 Ohio State Water Development Authority, Pollution Control Facilities Revenue
Refunding Bonds (Toledo Edison Company Project), VRDN, Series A, 5.35% due
4/01/2024 (d) 10,100
3,740 Paudling County, Ohio, Solid Waste Disposal Revenue Bonds (Lafarge
Corporation Project), VRDN, AMT, 5.35% due 8/01/2026 (d) 3,740
Oklahoma-- 74,700 Oklahoma State Industries Authority, Revenue Refunding Bonds (Integris
0.8% Baptist), VRDN, Series B, 5.50% due 8/15/2029 (d)(f) 74,700
Oregon--0.1% 8,700 Oregon State Health, Housing, Educational and Cultural Facilities Authority
Revenue Bonds (Sacred Heart Medical Center), VRDN, Series A, 5.47% due
11/01/2028 (d) 8,700
Pennsylvania-- 6,700 Allegheny County, Pennsylvania, Higher Education Building Authority,
2.7% University Revenue Bonds (Carnegie Mellon University), VRDN, 5.60% due
12/01/2033 (d) 6,700
18,700 Berks County, Pennsylvania, IDA, Revenue Bonds (Healthcare-Lutheran
Services), VRDN, Series A, 5.40% due 1/01/2028 (a)(d) 18,700
2,500 Butler County, Pennsylvania, IDA, IDR, Refunding (Wetterau Finance Co.
Project), VRDN, 5.50% due 12/01/2014 (d) 2,500
11,100 Delaware County, Pennsylvania, IDA, PCR (BP Oil Inc. Project), UPDATES,
5.50% due 12/01/2009 (d) 11,100
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Pennsylvania $ 15,700 Delaware County, Pennsylvania, IDA, PCR, Refunding (Philadelphia Electric
(concluded) Company), VRDN, Series A, 5.50% due 8/01/2016 (d) $ 15,700
32,700 Delaware Valley, Pennsylvania, Regional Finance Authority, Local Government
Revenue Bonds, VRDN, Mode 1, 5.45% due 8/01/2016 (d) 32,700
18,735 Eagle Tax-Exempt Trust, Pennsylvania, VRDN, Series 94, Class 3803, 5.62% due
5/01/2008 (d) 18,735
35,000 Emmaus, Pennsylvania, General Authority Revenue Bonds, VRDN, 5.40% due
12/01/2028 (d)(e) 35,000
11,450 Geisinger, Pennsylvania, Health System Revenue Refunding Bonds (Penn State-
Geisinger Health), VRDN, Series B, 5.50% due 8/15/2028 (d) 11,450
12,000 Lackawanna County, Pennsylvania, GO, MSTR, VRDN, Series SGB-38, 4.44% due
9/15/2020 (d) 12,000
Pennsylvania State Higher Education Assistance Agency, Student Loan
Revenue Bonds, VRDN, AMT (a)(d):
11,200 Series A, 5.75% due 1/01/2018 11,200
5,000 Series B, 5.75% due 7/01/2018 5,000
16,975 Pennsylvania State Higher Educational Facilities Authority, College and
University Revenue Bonds (Temple University), FLOATS, 5.45% due
10/01/2009 (b)(d) 16,975
Pennsylvania State Higher Educational Facilities Authority, Revenue Refunding
Bonds (Carnegie Mellon University), VRDN (d):
10,100 Series A, 5.50% due 11/01/2025 10,100
7,600 Series C, 5.50% due 11/01/2029 7,600
6,600 Philadelphia, Pennsylvania, Authority for IDR (Fox Chase Cancer Center
Project), VRDN, 5.50% due 7/01/2025 (d) 6,600
Philadelphia, Pennsylvania, Hospitals and Higher Education Facilities Authority,
Hospital Revenue Bonds (Children's Hospital of Philadelphia Project), VRDN (d):
9,700 5.50% due 3/01/2027 9,700
7,000 Series A, 5.50% due 3/01/2027 7,000
14,795 York, Pennsylvania, General Authority, Pooled Financing Revenue Bonds,
VRDN, Sub Series 96-B, 5.40% due 9/01/2026 (a)(d) 14,795
South Carolina-- Berkeley County, South Carolina, Exempt Facilities, Industrial Revenue Bonds
1.2% (Amoco Chemical Company Project), AMT, VRDN (d):
15,300 5.65% due 4/01/2027 15,300
5,700 5.65% due 4/01/2028 5,700
9,350 Berkeley County, South Carolina, Pollution Control Facilities, Revenue
Refunding Bonds (Amoco Chemical Company Project), VRDN, 5.45% due
7/01/2012 (d) 9,350
14,850 Eagle Tax-Exempt Trust, South Carolina Public Works, VRDN, Series 96A,
4.44% due 1/01/2022 (d) 14,850
Florence County, South Carolina, Solid Waste Disposal and Wastewater
Treatment Revenue Bonds (Roche Carolina Inc. Project), VRDN, AMT (d):
35,000 5.65% due 4/01/2026 35,000
19,200 5.65% due 4/01/2027 19,200
South Carolina Jobs, EDA, Economic Development Revenue Bonds (Wellman Inc.
Project), VRDN, AMT (d):
5,400 5.65% due 12/01/2010 5,400
12,095 5.65% due 12/01/2012 12,095
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
South $ 13,300 Lawrence County, South Dakota, Solid Waste Disposal Revenue Bonds
Dakota-- (Homestake Mining), VRDN, AMT, Series A, 5.50% due 7/01/2032 (d) $ 13,300
0.1%
Tennessee-- Clarksville, Tennessee, Public Building Authority Revenue Bonds, Pooled
5.2% Financing (Tennessee Municipal Bond Fund), VRDN (d):
89,990 5.70% due 11/01/2027 89,990
81,800 5.70% due 6/01/2029 81,800
Knoxville, Tennessee, Utilities Board Revenue Bonds, VRDN (d)(e):
12,900 (Sub-Electric System), 5.45% due 1/15/2005 12,900
8,700 (Sub-Gas System), 5.45% due 1/15/2005 8,700
10,000 (Sub-Wastewater System), 5.50% due 1/15/2005 10,000
8,100 Loudon, Tennessee, IDB, Revenue Refunding Bonds (A.E. Staley Manufacturing
Co. Project), VRDN, 5.60% due 9/01/2001 (d) 8,100
36,495 Montgomery County, Tennessee, Public Building Authority, Pooled Financing
Revenue Bonds (Montgomery County Loan), VRDN, 5.70% due 7/01/2019 (d) 36,495
14,955 Morristown, Tennessee, IDB, PCR, Refunding (Akzo Chemicals, Inc. Project),
VRDN, 5.60% due 8/01/2001 (d) 14,955
Sevier County, Tennessee, Public Building Authority Revenue Bonds, Local
Government Public Improvement, VRDN (d):
15,000 (II), Series F-3, 5.55% due 6/01/2005 (a) 15,000
26,500 (III), AMT, Series B-1, 5.60% due 6/01/2021 (a) 26,500
10,000 (III), Series D-2, 5.55% due 6/01/2017 (a) 10,000
5,000 (III), Series D-6, 5.55% due 6/01/2020 (a) 5,000
15,930 (III), Series E-1, 5.55% due 6/01/2025 15,930
10,000 (III), Series E-4, 5.55% due 6/01/2025 10,000
10,000 (IV), Series B-2, 5.55% due 6/01/2019 (e) 10,000
7,000 (IV), Series B-3, 5.55% due 6/01/2013 (e) 7,000
Shelby County, Tennessee, TAN, CP:
38,000 Series 97-B, 4.30% due 10/11/2000 38,000
25,000 Series 97-B, 4.30% due 10/13/2000 25,000
38,500 Series 98-A, 4.20% due 11/14/2000 38,500
22,000 Series 98-A, 4.25% due 12/06/2000 22,000
Texas--17.1% 25,720 Austin, Texas, Utility System Revenue Bonds, CP, Series A, 4.10% due 11/07/2000 25,720
10,000 Brazos River Authority, Texas, Harbor Navigational District, Brazoria County
Revenue Bonds (BASF Corp.), VRDN, AMT, 5.55% due 4/01/2032 (d) 10,000
Brazos River Authority, Texas, PCR, Refunding (Texas Utilities Electric
Company), VRDN, AMT (d):
8,400 Series A, 5.65% due 3/01/2026 (a) 8,400
15,600 Series A, 5.65% due 4/01/2030 15,600
9,700 Series A, 5.55% due 2/01/2032 (f) 9,700
24,005 Series B, 5.55% due 2/01/2032 (f) 24,005
15,800 Series C, 5.65% due 6/01/2030 (a) 15,800
8,400 Series C, 5.65% due 2/01/2032 (f) 8,400
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Texas $ 50,100 Coastal Bend Health Facilities Development Corp., Texas, Revenue Bonds
(continued) (Incarnate World Health System), UPDATES, Series B, 5.55% due
8/15/2028 (a)(d) $ 50,100
4,000 Corpus Christi, Texas, Industrial Development Corp., IDR (Dedietrich USA
Incorporated Project), VRDN, AMT, 5.65% due 11/01/2008 (d) 4,000
Dallas, Texas, Area Rapid Transit, Sales Tax Revenue Bonds, CP:
17,700 4.20% due 10/17/2000 17,700
20,000 4.20% due 12/12/2000 20,000
8,640 Dallas, Texas, GO, Refunding and Improvement Bonds, 4% due 2/15/2001 8,621
Dallas-Fort Worth, Texas, Regional Airport Revenue Bonds, MSTR, VRDN,
AMT (d)(f):
25,300 Series SGB-49, 5.60% due 11/01/2023 25,300
9,495 Series SGB-52, 5.73% due 11/01/2017 9,495
Dallas-Fort Worth, Texas, Regional Airport Revenue Refunding Bonds, MSTR,
VRDN (d):
15,785 AMT, Series SGB-46, 5.73% due 11/01/2020 (f) 15,785
6,600 Series SGB-52, 5.62% due 11/01/2015 (c) 6,600
9,900 Eagle Tax-Exempt Trust, Dallas-Fort Worth, Texas, VRDN, Series 96C, Class 4301,
5.62% due 11/01/2005 (d) 9,900
5,300 Grapevine, Texas, Industrial Development Corporation, Airport Revenue
Refunding Bonds (Southern Air Transport), VRDN, 5.45% due 3/01/2010 (d) 5,300
7,300 Gulf Coast IDA, Texas, Marine Terminal Revenue Bonds (Amoco Oil Company
Project), VRDN, AMT, 5.65% due 4/01/2028 (d) 7,300
Gulf Coast IDA, Texas, Solid Waste Disposal Revenue Bonds (Citgo Petroleum
Corporation Project), VRDN, AMT (d):
10,200 5.70% due 5/01/2025 10,200
7,400 5.70% due 4/01/2026 7,400
28,500 Gulf Coast Waste Disposal Authority, Texas, Environmental Facilities Revenue
Refunding Bonds (Amoco Oil Company Project), VRDN, AMT, 5.65% due
1/01/2026 (d) 28,500
36,300 Gulf Coast Waste Disposal Authority, Texas, PCR (Amoco Oil Company Project),
VRDN, AMT, 5.65% due 6/01/2024 (d) 36,300
Gulf Coast Waste Disposal Authority, Texas, PCR, Refunding, VRDN (d):
35,765 (Amoco Oil Company Project), 5.50% due 10/01/2017 35,765
9,400 (Exxon Project), 5.45% due 6/01/2020 9,400
4,800 Harris County, Texas, GO, Refunding, Toll Road, Sub-Lien, VRDN, Series E,
5.45% due 8/01/2015 (d) 4,800
Harris County, Texas, Health Facilities Development Corporation, Hospital
Revenue Refunding Bonds, VRDN (d):
62,900 (Memorial Hospital System Project), Series B, 5.40% due 6/01/2024 (f) 62,900
184,370 (Methodist Hospital), 5.50% due 12/01/2025 184,370
127,650 (Methodist Hospital), 5.50% due 12/01/2026 127,650
4,300 Harris County, Texas, Health Facilities Development Corporation, Revenue
Refunding Bonds (Saint Luke's Episcopal Hospital), VRDN, Series B, 5.55% due
2/15/2027 (d) 4,300
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Texas $ 10,400 Harris County, Texas, Health Facilities Development Corporation, Special
(continued) Facilities Revenue Bonds (Texas Medical Center Project), VRDN, 5.55% due
2/15/2022 (d)(f) $ 10,400
Harris County, Texas, Industrial Development Corporation, PCR (Exxon
Project), VRDN (d):
29,100 5.50% due 3/01/2024 29,100
8,100 AMT, 5.45% due 8/15/2027 8,100
Harris County, Texas, Industrial Development Corporation, Solid Waste
Disposal Revenue Bonds, VRDN, AMT (d):
46,100 (Deer Park Limited Partnership), Series A, 5.70% due 2/01/2023 46,100
18,550 (Exxon Project), 5.45% due 4/01/2032 18,550
17,710 Harris County, Texas, VRDN, Series SG-45, 5.62% due 8/15/2016 (d) 17,710
43,450 Hockley County, Texas, Industrial Development Corporation, PCR (Amoco
Project-Standard Oil Company), 4.40% due 3/01/2001 43,450
4,900 North Central Texas, Health Facility Development Corporation Revenue Bonds
(Methodist Hospitals-Dallas), VRDN, Series B, 5.50% due 10/01/2015 (d)(f) 4,900
North Texas Higher Education Authority Inc., Student Loan Revenue Bonds,
VRDN, AMT (a)(d):
12,800 Series C, 5.50% due 4/01/2020 12,800
13,700 Series F, 5.50% due 4/01/2020 13,700
North Texas Higher Education Authority Inc., Student Loan Revenue Refunding
Bonds, VRDN, AMT (d):
27,900 5.50% due 3/01/2005 27,900
26,000 5.50% due 12/01/2032 26,000
29,000 Series A, 5.50% due 4/01/2005 29,000
5,000 Series A, 5.50% due 4/01/2020 5,000
Panhandle-Plains, Texas, Higher Education Authority Incorporated, Student
Loan Revenue Bonds, VRDN, AMT, Series A (d):
9,000 5.50% due 6/01/2021 9,000
13,700 5.50% due 6/01/2025 13,700
4,700 Panhandle-Plains, Texas, Higher Education Authority Incorporated, Student
Loan Revenue Refunding Bonds, VRDN, AMT, Series A, 5.50% due 6/01/2008 (d) 4,700
20,000 Port Arthur, Texas, Navigation District Revenue Bonds (BASF Corporation
Project), VRDN, AMT, 5.55% due 4/01/2033 (d) 20,000
30,500 Port Arthur, Texas, Navigation District Revenue Refunding Bonds (Texaco Inc.
Project), VRDN, 5.50% due 10/01/2024 (d) 30,500
18,800 Port Corpus Christi, Texas, Industrial Development Corporation, Sewer and
Solid Waste Revenue Bonds (Citgo Petroleum Corporation Project), VRDN,
AMT, 5.70% due 4/01/2026 (d) 18,800
13,200 Sabine River Authority, Texas, PCR, Refunding (Texas Utilities Electric
Company Project), VRDN, Series A, 5.40% due 3/01/2026 (a)(d) 13,200
15,900 Sabine River Authority, Texas, PCR (Texas Utilities Electric Company Project),
VRDN, AMT, Series B, 5.50% due 3/01/2026 (a)(d) 15,900
9,600 San Antonio, Texas, Higher Education Authority, Revenue Refunding Bonds
(Trinity University Project), VRDN, 5.45% due 4/01/2004 (d) 9,600
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Texas $ 10,000 San Antonio, Texas, Hotel Occupancy Revenue Bonds, FLOATS, Series SG-51,
(concluded) 5.62% due 8/15/2019 (d) $ 10,000
2,200 South Texas Higher Education Authority Incorporated Revenue Bonds, VRDN,
AMT, 5.50% due 12/01/2027 (d)(f) 2,200
16,300 Southwest Texas, Higher Education Authority Incorporated, Revenue Refunding
Bonds (Southern Methodist University), VRDN, 5.50% due 7/01/2015 (d) 16,300
12,200 Texas State Public Facilities Authority, CP, 4.20% due 10/18/2000 12,200
237,000 Texas State, TRAN, 5.25% due 8/31/2001 239,016
28,400 Texas State, Water Development Board, VRDN, Series A, 5.50% due
3/01/2015 (d) 28,400
21,200 Trinity River Authority, Texas, PCR, Refunding (Utilities Electric Company
Project), VRDN, AMT, Series A, 5.65% due 3/01/2026 (a)(d) 21,200
28,600 West Side Calhoun County, Texas, Development Revenue Bonds (Sohio
Chemical Company Project), UPDATES, 5.50% due 12/01/2015 (d) 28,600
4,200 West Side Calhoun County, Texas, Navigation District Sewer and Solid Waste
District Revenue Bonds (BP Chemicals Inc. Project), VRDN, AMT, 5.65% due
4/01/2031 (d) 4,200
Utah--3.1% 70,800 Emery County, Utah, PCR, Refunding (Pacificorp Projects), VRDN, 5.50% due
11/01/2024 (a)(d) 70,800
Intermountain Power Agency, Utah, Power Supply Revenue Bonds, CP,
Series B-4:
11,000 4.25% due 10/12/2000 11,000
25,000 4.20% due 11/14/2000 25,000
27,600 Salt Lake City, Utah, Revenue Bonds, Pooled, VRDN, Class A, 5.55% due
1/01/2020 (d) 27,600
11,000 Salt Lake County, Utah, GO, TRAN, 5% due 12/29/2000 11,017
Salt Lake County, Utah, PCR, Refunding (Service Station Holdings Project),
VRDN (d):
24,300 5.45% due 2/01/2008 24,300
43,115 Series B, 5.50% due 8/01/2007 43,115
6,000 Utah State Board of Regents, Student Loan Revenue Bonds, VRDN, AMT,
Series C, 5.50% due 11/01/2013 (a)(d) 6,000
33,500 Utah State Board of Regents, Student Loan Revenue Refunding Bonds, VRDN,
AMT, Series L, 5.50% due 11/01/2025 (a)(d) 33,500
Utah State, GO, Refunding, VRDN (d):
11,000 Series A, 5.50% due 7/01/2016 11,000
18,000 Series D, 5.50% due 7/01/2016 18,000
12,500 Weber County, Utah, Hospital Revenue Bonds (IHC Health Services), VRDN,
Series A, 5.55% due 2/15/2031 (d) 12,500
Virginia-- 8,885 Eagle Tax-Exempt Trust, Virginia, VRDN, Series 95, Class 4602, 4.44% due
0.7% 1/15/2013 (d) 8,885
Norfolk, Virginia, IDA, Revenue Bonds (Pooled Financing Program-Sentara), CP:
30,100 4.25% due 11/15/2000 30,100
30,000 4.25% due 11/16/2000 30,000
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (continued) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Washington $ 17,000 King County, Washington, Sewer System, CP, Series A, 4.30% due 10/10/2000 $ 17,000
--3.7% 30,200 Snohomish County, Washington, Public Utility District Number 001, Electric
Revenue Bonds (Generation System), VRDN, 5.40% due 1/01/2025 (d)(f) 30,200
22,335 Washington State, GO, Refunding, Series R-98B, 3.95% due 1/01/2001 22,287
Washington State Housing Finance Commission, M/F Housing Revenue Bonds,
VRDN, AMT (d):
6,400 (Arbors on the Park Project), 5.95% due 10/01/2024 6,400
10,190 (Courtside Apartments Project), 5.55% due 1/01/2026 10,190
Washington State Public Power Supply Systems, Electric Revenue Refunding
Bonds, VRDN (d)(f):
25,000 (Project Number 2), Series 2A-1, 5.40% due 7/01/2012 25,000
49,000 (Project Number 2), Series 2A-2, 5.40% due 7/01/2012 49,000
159,500 (Project Number 3), Series 3A, 5.45% due 7/01/2018 159,500
26,450 Washington State Public Power Supply Systems, Revenue Refunding Bonds
(Nuclear Project Number 1), VRDN, Series 1A-2, 5.40% due 7/01/2017 (d) 26,450
West Virginia 11,220 Hancock County, West Virginia, County Commission, IDR, Refunding (The Boc
--0.3% Group Inc. Project), VRDN, 5.60% due 8/01/2005 (d) 11,220
13,600 Marshall County, West Virginia, PCR (Mountaineer Carbon Co.), UPDATES,
5.50% due 12/01/2020 (d) 13,600
Wisconsin-- 14,850 Eagle Tax-Exempt Trust, Wisconsin Ball Park, VRDN, Series 98, Class 4901,
1.9% 4.80% due 12/15/2026 (d) 14,850
1,080 Eagle Tax-Exempt Trust, Wisconsin Housing and Economy, VRDN, Series 94C,
Class 4901, 4.44% due 9/01/2015 (d) 1,080
5,210 Hartland, Wisconsin, IDR (Commercial Communications Inc. Project), VRDN,
AMT, 5.75% due 8/01/2009 (d) 5,210
19,000 Pleasant Prairie, Wisconsin, Pollution Revenue Refunding Bonds (Wisconsin
Electric Power Company), VRDN, Series C, 5.45% due 9/01/2030 (d) 19,000
23,900 Racine, Wisconsin, Unified School District, TRAN, 4.65% due 7/06/2001 23,940
5,000 River Falls, Wisconsin, School District Revenue Bonds, BAN, Series A,
5.60% due 11/30/2000 5,007
16,000 Sheboygan, Wisconsin, PCR, Refunding (Wisconsin Power and Light Company
Project), VRDN, Series A, 5.50% due 9/01/2015 (d) 16,000
14,100 University of Wisconsin, Hospital and Clinics Authority, Hospital Revenue
Bonds, VRDN, 5.60% due 4/01/2026 (d)(f) 14,100
Wisconsin State, GO, CP, Series A:
30,000 4.30% due 10/12/2000 30,000
18,430 4.35% due 10/16/2000 18,430
Wisconsin State Health and Educational Facilities Authority Revenue Bonds
(SSM Health Care), CP, Series 98-B:
15,000 4.35% due 10/05/2000 15,000
15,000 4.35% due 11/08/2000 15,000
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Schedule of Investments as of September 30, 2000 (concluded) (in Thousands)
<CAPTION>
Face
State Amount Issue Value
<S> <C> <S> <C>
Wyoming-- $ 10,000 Kemmerer, Wyoming, PCR (Exxon Corporation Project), DATES, 5.35% due
1.4% 11/01/2014 (d) $ 10,000
Lincoln County, Wyoming, PCR (Exxon Project) (d):
8,000 DATES, Series A, 5.45% due 11/01/2014 8,000
8,400 VRDN, AMT, Series B, 5.45% due 7/01/2017 8,400
12,960 Lincoln County, Wyoming, PCR, Refunding (Pacificorp Projects), VRDN,
5.50% due 11/01/2024 (a)(d) 12,960
Sweetwater County, Wyoming, PCR, Refunding, VRDN (d):
13,900 (Idaho Power Company Project), Series C, 5.40% due 7/15/2026 13,900
12,000 (Pacificorp Project), 5.50% due 11/01/2024 (a) 12,000
500 Uinta County, Wyoming, PCR, Refunding (Chevron USA Inc. Project), VRDN,
5.35% due 12/01/2022 (d) 500
65,000 Wyoming State General Fund, TRAN, Series A, 5% due 6/27/2001 65,327
Total Investments (Cost--$9,446,900++)--100.8% 9,446,900
Liabilities in Excess of Other Assets--(0.8%) (71,205)
----------
Net Assets--100.0% $9,375,695
==========
(a)AMBAC Insured.
(b)Escrowed to maturity.
(c)FGIC Insured.
(d)The interest rate is subject to change periodically based upon
prevailing market rates. The interest rate shown is the rate in
effect at September 30, 2000.
(e)FSA Insured.
(f)MBIA Insured.
(g)Prerefunded.
++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, 2000
<S> <C> <C>
Assets:
Investments, at value (identified cost--$9,446,899,695) $ 9,446,899,695
Cash 670,351
Receivables:
Interest $ 65,837,762
Securities sold 808,704 66,646,466
---------------
Prepaid registration fees and other assets 216,817
---------------
Total assets 9,514,433,329
---------------
Liabilities:
Payables:
Securities purchased 132,892,934
Investment adviser 2,845,712
Distributor 2,438,412 138,177,058
---------------
Accrued expenses and other liabilities 560,911
---------------
Total liabilities 138,737,969
---------------
Net Assets $ 9,375,695,360
===============
Net Assets Consist of:
Shares of beneficial interest, $.10 par value, unlimited number of shares
authorized $ 937,734,561
Paid-in capital in excess of par 8,438,646,278
Accumulated realized capital losses--net (685,479)
---------------
Net Assets--Equivalent to $1.00 per share based on 9,377,345,612 shares of
beneficial interest outstanding $ 9,375,695,360
===============
See Notes to Financial Statements.
</TABLE>
<TABLE>
CMA Tax-Exempt Fund
Statement of Operations for the Six Months Ended September 30, 2000
<S> <C> <C>
Investment Income:
Interest and amortization of premium and discount earned $ 204,015,261
Expenses:
Investment advisory fees $ 18,582,707
Distribution fees 6,025,562
Transfer agent fees 521,548
Accounting services 393,420
Registration fees 170,920
Custodian fees 125,437
Printing and shareholder reports 52,379
Professional fees 38,264
Trustees' fees and expenses 21,421
Pricing fees 20,914
Other 42,580
---------------
Total expenses 25,995,152
---------------
Investment income--net 178,020,109
Realized Gain on Investments--Net 64,794
---------------
Net Increase in Net Assets Resulting from Operations $ 178,084,903
===============
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, 2000 March 31, 2000
<S> <C> <C>
Operations:
Investment income--net $ 178,020,109 $ 273,017,030
Realized gain (loss) on investments--net 64,794 (173,225)
--------------- ---------------
Net increase in net assets resulting from operations 178,084,903 272,843,805
--------------- ---------------
Dividends to Shareholders:
Investment income--net (178,020,109) (273,017,030)
--------------- ---------------
Net decrease in net assets resulting from dividends to shareholders (178,020,109) (273,017,030)
--------------- ---------------
Beneficial Interest Transactions:
Net proceeds from sale of shares 17,762,830,777 35,370,860,092
Value of shares issued to shareholders in reinvestment of dividends 178,025,595 273,013,356
--------------- ---------------
17,940,856,372 35,643,873,448
Cost of shares redeemed (18,754,017,390) (35,185,040,095)
--------------- ---------------
Net increase (decrease) in net assets derived from beneficial interest
transactions (813,161,018) 458,833,353
--------------- ---------------
Net Assets:
Total increase (decrease) in net assets (813,096,224) 458,660,128
Beginning of period 10,188,791,584 9,730,131,456
--------------- ---------------
End of period $ 9,375,695,360 $10,188,791,584
=============== ===============
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: 2000 2000 1999 1998 1997
<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
Realized gain (loss) on investments--net --++ --++ --++ --++ --++
---------- ---------- ---------- ---------- ----------
Total from investment operations .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 3.67%* 2.91% 2.87% 3.16% 3.00%
========== ========== ========== ========== ==========
Ratios to Average Net Assets:
Expenses .54%* .54% .55% .55% .55%
========== ========== ========== ========== ==========
Investment income--net 3.67%* 2.87% 2.83% 3.11% 2.94%
========== ========== ========== ========== ==========
Supplemental Data:
Net assets, end of period (in thousands) $9,375,695 $10,188,792 $9,730,131 $9,356,705 $8,347,278
========== ========== ========== ========== ==========
*Annualized.
++Amount is less than $.01 per share.
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 Fund's financial statements are prepared in
conformity with accounting principles generally accepted in the
United States of America, which may require the use of management
accruals and estimates. These unaudited financial statements reflect
all adjustments, which are, in the opinion of management, necessary
to a fair statement of the results for the interim period presented.
All such adjustments are of a normal, recurring nature. 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: .50%
of the Fund's average daily net assets not exceeding $500 million;
.425% of the average daily net assets in excess of $500 million but
not exceeding $1 billion; and .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 Incorporated ("MLPF&S")
receives a distribution fee from the Fund at the end of each month
at the annual rate of .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, reinvested 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, value of
shares reinvested and cost of shares redeemed, respectively, since
shares are recorded at $1.00 per share.
4. Capital Loss Carryforward:
At March 31, 2000, the Fund had a net capital loss carryforward of
approximately $750,000, of which $629,000 expires in 2003 and
$121,000 expires in 2008. This amount will be available to offset
like amounts of any future taxable gains.
CMA Tax-Exempt Fund
Officers and Trustees
Terry K. Glenn--President and Trustee
Ronald W. Forbes--Trustee
Cynthia A. Montgomery--Trustee
Charles C. Reilly--Trustee
Kevin A. Ryan--Trustee
Roscoe S. Suddarth--Trustee
Richard R. West--Trustee
Arthur Zeikel--Trustee
Edward D. Zinbarg--Trustee
Vincent R. Giordano--Senior Vice President
Peter J. Hayes--Vice President
Kenneth A. Jacob--Vice President
Helen Marie Sheehan--Vice President
Donald C. Burke--Vice President and
Treasurer
Phillip Gillespie--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*
*For inquiries regarding your CMA account,
call (800) CMA-INFO [(800) 262-4636].
