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
accordance with generally accepted accounting principles which may require the use of management accruals and
estimates. 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
(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 deducti