FEDERATED
TAX-FREE TRUST
SEMI-ANNUAL REPORT
SEMI-ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1994
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
314282104
8070103 (7/94)
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for Federated
Tax-Free Trust (the "Trust"), which covers the six-month period ended May 31,
1994. The report includes the Investment Review and Financial Statements, which
contain the Portfolio of Investments.
The Trust continued its pursuit of current income exempt from federal income
tax*--along with the additional advantages of daily liquidity and stability of
principal**--through a highly diversified portfolio of municipal securities from
36 states and Puerto Rico.
At the end of the period, the Trust's net assets stood at $1.21 billion.
Dividends paid to shareholders during the period totaled approximately $14.2
million, or $0.01 per share.
Thank you for your continued confidence in Federated Tax-Free Trust. We'll
continue to keep you up to date on your investment, and welcome your comments
and suggestions.
Sincerely,
Glen R. Johnson
President
July 15, 1994
* Income may be subject to state and local taxes.
** While no money market mutual fund can guarantee that a stable net asset value
will be maintained, the Trust has done so since its inception. An investment
in the Trust is neither insured nor guaranteed by the U.S. government.
INVESTMENT REVIEW
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Federated Tax-Free Trust invests in high quality short-term tax-free debt
securities and seeks to maintain a stable net asset value of $1.00 per share.
For the six-month period ended May 31, 1994, the Trust paid shareholders a net
annualized return of 2.12%.* This is equivalent to a taxable money market fund
return of 3.49% in the highest federal tax bracket of 39.6%.
The first few months of the reporting period were characterized by slow economic
growth coupled with low inflationary pressures. With little threat of inflation,
the municipal markets responded with some of the lowest yields over the past
decade in both the bond and the money markets.
In the first quarter of 1994, there was a shift in the outlook for the economy
and, in turn, short-term interest rates. Signs of economic strength prompted the
Federal Reserve Board ("Fed") to twice "tighten" or increase short-term interest
rates, moving the Federal Funds rate target from 3.0% to 3.50%. The Fed again
tightened twice (in mid-April and mid-May) moving the Federal Funds target from
3.50% to 4.25%. The municipal money market reacted to the Fed policy with a
corresponding increase in rates, which was somewhat exacerbated by $3.2 billion
of new fixed-rate supply offered by the State of California in mid-February.
With renewed concerns of economic recovery and inflation, investors demanded
higher liquidity premiums to invest further out on the yield curve, causing
rates on one-year municipal notes to rise to their highest levels since June
1992. For example, The Bond Buyer Note Index**, a proxy for one year municipal
notes, started the period at 2.55% and steadily increased over 1.20% to end the
period at 3.75%. Although yields on 12-month tax-free securities did rise they
did not rise by the same magnitude as on comparable maturity taxable
instruments. In November 1993, the one-year tax-exempt note yield was 76% of the
taxable yield; in May it was 68%. The direction of rates on tax-free variable
rate demand notes (VRDNs), which comprise 50% of the Trust's assets, increased
as well over the period. VRDNs started the period at 2.20% and increased 0.70%
to 2.90% by May 31, 1994. However, because VRDNs are particularly affected by a
variety of supply/demand and seasonal factors, VRDN yields displayed significant
volatility over the period.
In this environment of increasing money market interest rates, the Trust's
average portfolio maturity was shortened from the 50-day range at the beginning
of December 1993 to the 40-day range in May 1994. Looking ahead to the second
half of 1994, we expect short-term rates to continue to rise, as the U.S.
economy continues its recovery. If rates do in fact rise this year, we will
continue to keep the average maturity short and the portfolio liquid while
choosing carefully and selectively along the yield curve as attractive fixed
income opportunities appear.
* Past performance does not guarantee future results. Yield will vary.
** This index is unmanaged.
FEDERATED TAX-FREE TRUST
PORTFOLIO OF INVESTMENTS
MAY 31, 1994
(UNAUDITED)
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SHORT-TERM MUNICIPAL SECURITIES--101.7%
- ---------------------------------------------------------------------
ALABAMA--2.2%
------------------------------------------------------
$14,100,000 Birmingham, AL, GO Weekly VRDNs (Series 1992A)/ (First
Alabama Bank LOC) A-1+ $ 14,100,000
------------------------------------------------------
1,500,000 Birmingham, AL, Medical Clinic Board Daily VRDNs
(University of Alabama Health Services Foundation)/
(Morgan Guaranty Trust Co. LOC) A-1+ 1,500,000
------------------------------------------------------
400,000 Bon Air, AL, IDB Weekly VRDNs (Avondale Mills, Inc.)/
(Trust Company Bank LOC) P-1 400,000
------------------------------------------------------
2,000,000 Madison, AL, IDA Weekly VRDNs (Series A)/(Executive
Inn Ltd.)/(AmSouth Bank N.A. LOC) A-1 2,000,000
------------------------------------------------------
1,500,000 Mobile, AL, IDB, PCR Weekly VRDNs (Series 1993A)/
(Alabama Power Co. Guaranty) A-1 1,500,000
------------------------------------------------------
1,000,000 Montgomery, AL, BMC Special Care Facilities Finance
Authority Weekly VRDNs (Series 94A)/(Baptist Medical
Center)/(AmSouth Bank N.A. LOC) VMIG1 1,000,000
------------------------------------------------------
6,030,000 Montgomery, AL, IDB, Pollution Control & Solid Waste
Disposal Revenue, 3.05% CP (General Electric Co.
Guaranty), Mandatory Tender 8/18/94 A-1+ 6,030,000
------------------------------------------------------ --------------
Total 26,530,000
------------------------------------------------------ --------------
ARIZONA--3.9%
------------------------------------------------------
12,200,000 Arizona Agricultural Improvement & Power District,
2.50% CP (Salt River Project Guaranty), Mandatory
Tender 6/17/94 A-1+ 12,200,000
------------------------------------------------------
6,600,000 Arizona Agricultural Improvement & Power District,
2.55% CP (Salt River Project Guaranty), Mandatory
Tender 6/24/94 A-1+ 6,600,000
------------------------------------------------------
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
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ARIZONA--CONTINUED
------------------------------------------------------
$ 9,000,000 Arizona Agricultural Improvement & Power District,
3.30% CP (Salt River Project Guaranty), Mandatory
Tender 10/20/94 A-1+ $ 9,000,000
------------------------------------------------------
20,000,000 Pima County, AZ, IDA Weekly VRDNs (Tucson Electric
Power Co.)/(Barclays Bank, PLC LOC) VMIG1 20,000,000
------------------------------------------------------ --------------
Total 47,800,000
------------------------------------------------------ --------------
CALIFORNIA--7.6%
------------------------------------------------------
17,000,000 California School Cash Reserve Program Authority,
3.40% TANs (Series 1993A)/(California School Boards
Pooled Loan Program), 7/5/94 SP-1+ 17,007,680
------------------------------------------------------
10,500,000 California State, 3.35% Semi-Annual TOBs (Banque
Nationale de Paris LOC)/(FGIC Insured), 11/1/94 NR(2) 10,500,000
------------------------------------------------------
20,000,000 California State, 3.50% RANs (Series 1994B), 7/26/94 SP-1 20,019,288
------------------------------------------------------
10,000,000 California Student Loan Revenue Bonds, 2.70% Annual
TOBs (Student Loan Marketing Association), Mandatory
Tender 7/1/94 VMIG1 10,000,000
------------------------------------------------------
5,000,000 Los Angeles County School and Community College
Districts, 3.25% TRANs (Series 1993-94B), 9/7/1994 SP-1+ 5,004,564
------------------------------------------------------
19,000,000 San Bernardino County, CA, 3.25% TRANs (Series 1993),
7/29/94 A-1+ 19,014,076
------------------------------------------------------
7,000,000 San Francisco, CA, Unified School District, 3.50%
TRANs, 8/12/94 SP-1+ 7,006,023
------------------------------------------------------
4,000,000 Victor, CA, Elementary School District, 3.50% TRANs,
7/29/94 SP-1+ 4,002,472
------------------------------------------------------ --------------
Total 92,554,103
------------------------------------------------------ --------------
COLORADO--2.8%
------------------------------------------------------
10,000,000 Arapahoe County, CO, Improvement Authority, 2.90%
Semi-Annual TOBs (Society Generale LOC), Optional
Tender 8/31/94 SP-1+ 10,000,000
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
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COLORADO--CONTINUED
------------------------------------------------------
$ 2,500,000 Loveland, CO, IDR, 2.75% Semi-Annual TOBs (Series
1993S)/(Safeway, Inc.)/(Bankers Trust Co. LOC),
Mandatory Tender 6/1/94 A-1+ $ 2,500,000
------------------------------------------------------
2,500,000 Loveland, CO, IDR, 3.40% Semi-Annual TOBs (Series
1993S)/(Safeway, Inc.)/(Bankers Trust Co. LOC),
Mandatory Tender 12/1/94 A-1+ 2,500,000
------------------------------------------------------
19,000,000 Moffat County, CO, PCR Weekly VRDNs (Series 1984)/
(Colorado UTE Electric Association)/(NRUCFC Guaranty) A-1 19,000,000
------------------------------------------------------ --------------
Total 34,000,000
------------------------------------------------------ --------------
CONNECTICUT--1.7%
------------------------------------------------------
4,000,000 Connecticut State Development Authority, PCR Weekly
VRDNs (Series 1993A)/(Western Massachusetts Electric
Co.)/(Union Bank of Switzerland LOC) A-1+ 4,000,000
------------------------------------------------------
5,000,000 Connecticut State Economic Recovery Notes Weekly VRDNs A-1+ 5,000,000
------------------------------------------------------
6,000,000 Connecticut State Transportation Infrastructure
Authority Weekly VRDNs (Industrial Bank of Japan Ltd.
LOC) A-1 6,000,000
------------------------------------------------------
6,000,000 Connecticut State, HFA, 2.80% Annual TOBs (Series
1993E-1)/(Housing Mortgage Finance Program), Mandatory
Tender 11/15/94 A-1+ 6,000,000
------------------------------------------------------ --------------
Total 21,000,000
------------------------------------------------------ --------------
FLORIDA--3.5%
------------------------------------------------------
6,000,000 Dade County, FL, Water & Sewer System Revenue Bonds,
3.00% Quarterly TOBs (Series 1993T-2)/(FGIC Insured)/
(Sanwa Bank BPA), Optional Tender 7/1/94 A-1+ 6,000,000
------------------------------------------------------
3,000,000 Dade County, FL, Water & Sewer System Revenue Bonds,
3.00% Quarterly TOBs (Series 1993T-2)/(FGIC Insured)/
(Sanwa Bank BPA), Optional Tender 7/1/94 A-1+ 3,000,000
------------------------------------------------------
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
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FLORIDA--CONTINUED
------------------------------------------------------
$ 7,000,000 Florida State Department of Environmental Protection
Weekly VRDNs (AMBAC Insured) A-1+ $ 7,000,000
------------------------------------------------------
8,715,000 Fort Lauderdale, FL, Performing Arts Center Authority
Weekly VRDNs (Sun Bank, N.A. LOC) VMIG1 8,715,000
------------------------------------------------------
5,200,000 Sunshine State Governmental Finance Commission, FL,
2.65% CP (Morgan Guaranty Trust Co., National
Westminster Bank, PLC and Union Bank of Switzerland
LOCs), Mandatory Tender 6/17/94 VMIG1 5,200,000
------------------------------------------------------
11,000,000 Sunshine State Governmental Finance Commission, FL,
3.20% CP (Morgan Guaranty Trust Co., National
Westminster Bank, PLC and Union Bank of Switzerland
LOCs), Mandatory Tender 8/25/94 VMIG1 11,000,000
------------------------------------------------------
1,720,000 University of Florida Athletic Association Weekly
VRDNs (University of Florida Stadium)/(Sun Bank, N.A.
LOC) VMIG1 1,720,000
------------------------------------------------------ --------------
Total 42,635,000
------------------------------------------------------ --------------
GEORGIA--2.2%
------------------------------------------------------
6,000,000 Burke County, GA, PCR Weekly VRDNs (Series 1992)/
(Georgia Power Co.)/(Trust Company Bank LOC) A-1+ 6,000,000
------------------------------------------------------
11,385,000 Fulco, GA, Hospital Authority Weekly VRDNs (Piedmont
Hospital)/(Trust Company Bank LOC) A-1+ 11,385,000
------------------------------------------------------
660,000 Georgia State Residential FHA, 3.125% Semi-Annual
TOBs, Optional Tender 6/1/94 A-1 660,000
------------------------------------------------------
8,000,000 Rockdale County, GA, Hospital Authority Weekly VRDNs
(Trust Company Bank LOC) VMIG1 8,000,000
------------------------------------------------------ --------------
Total 26,045,000
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ILLINOIS--6.2%
------------------------------------------------------
4,300,000 Illinois Development Authority Weekly VRDNs
(Series 1993A)/(Loyola Academy)/(Northern Trust Co.
LOC) A-1+ 4,300,000
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
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ILLINOIS--CONTINUED
------------------------------------------------------
$15,000,000 Illinois Development Finance Authority PCR, 3.20% CP
(Series A)/(Illinois Power Company)/(Canadian Imperial
Bank of Commerce LOC), Mandatory Tender 8/22/94 A-1+ $ 15,000,000
------------------------------------------------------
20,500,000 Illinois Health Facilities Authority Weekly VRDNs
(Series 1989A)/(Methodist Health Services Corp.)/
(Fuji Bank Ltd. LOC) A-1 20,500,000
------------------------------------------------------
25,000,000 Illinois Health Facilities Authority Weekly VRDNs
(Sisters of the Third Order of St. Francis)/(Swiss
Bank Corp. LOC) A-1 25,000,000
------------------------------------------------------
8,000,000 Illinois Health Facilities Authority, 2.65% Annual
TOBs (Highland Park Hospital)/(FGIC Insured), Optional
Tender 6/1/94 A-1+ 8,000,000
------------------------------------------------------
2,845,000 Rockford, IL, EDRB 3.00% TOBs (Independence Village of
Rockford)/(Banque Paribas, Paris LOC), Optional Tender
12/1/94 P-1 2,845,000
------------------------------------------------------ --------------
Total 75,645,000
------------------------------------------------------ --------------
INDIANA--3.1%
------------------------------------------------------
10,000,000 Gary, IN, Environmental Improvement Weekly VRDNs (USX
Project)/(Bank of Nova Scotia LOC) P-1 10,000,000
------------------------------------------------------
20,000,000 Indiana Bond Bank, 3.03% RANs (Series A2), 1/17/95 SP-1+ 20,034,247
------------------------------------------------------
7,200,000 Mt. Vernon, IN, Pollution Control & Solid Waste
Authority, 2.95% CP Disposal Revenue Bonds (General
Electric Company Guaranty), Mandatory Tender 6/16/94 A-1+ 7,200,000
------------------------------------------------------ --------------
Total 37,234,247
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
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IOWA--0.8%
------------------------------------------------------
$ 6,540,000 Indianola, IA, Weekly VRDNs Health Care Facility
Refunding Revenue Bonds (Series 1992)/(Norwest Bank
Minnesota LOC) A-1+ $ 6,540,000
------------------------------------------------------
2,600,000 Iowa Higher Education Loan Authority Revenue Bonds
Weekly VRDNs (MBIA Insured) VMIG1 2,600,000
------------------------------------------------------ --------------
Total 9,140,000
------------------------------------------------------ --------------
KANSAS--1.0%
------------------------------------------------------
12,300,000 Burlington, KS, PCR, 3.20% CP (Series 1985A)/(Kansas
City Power & Light Co.)/(Toronto-Dominion Bank LOC),
Mandatory Tender 9/22/94 A-1+ 12,300,000
------------------------------------------------------ --------------
KENTUCKY--0.4%
------------------------------------------------------
4,600,000 Kentucky Development Finance Authority Health Care
System Weekly VRDNs (Appalachian Regional Health Care,
Inc.)/(Societe Generale LOC) VMIG1 4,600,000
------------------------------------------------------ --------------
MARYLAND--1.9%
------------------------------------------------------
2,700,000 Baltimore, MD, PCR Weekly VRDNs (SCM Plants, Inc.)/
(Barclays Bank, PLC LOC) A-1+ 2,700,000
------------------------------------------------------
15,000,000 Montgomery County, MD, EDA Weekly VRDNs (Howard Hughes
Medical Institute Guaranty) VMIG1 15,000,000
------------------------------------------------------
2,915,000 Queen Annes County, MD, EDR, 3.10% Multi-Term TOBs
(Series 1994)/(Safeway Inc.)/(Bankers Trust Company
LOC), Mandatory Tender 12/1/94 A-1+ 2,915,000
------------------------------------------------------
2,000,000 Washington Suburban Sanitary District, Weekly VRDNs
(Series 1993)/(Montgomery & Prince George Counties
Maryland)/(Toronto-Dominion Bank LOC) A-1+ 2,000,000
------------------------------------------------------ --------------
Total 22,615,000
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
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MASSACHUSETTS--3.6%
------------------------------------------------------
$23,000,000 Commonwealth of Massachusetts, 2.40% CP (Series 7)/
(Union Bank of Switzerland, Swiss Bank Corporation,
Morgan Guaranty Trust Co., Credit Local de France and
Morgan Bank (Delaware), N.A. LOCs) Mandatory Tender
6/1/94 A-1+ $ 23,000,000
------------------------------------------------------
15,000,000 Commonwealth of Massachusetts, 2.80% CP (Series 7)/
(Union Bank of Switzerland, Swiss Bank Corporation,
Morgan Guaranty Trust Co., Credit Local de France and
Morgan Bank (Delaware), N.A. LOCs) Mandatory Tender
6/28/94 A-1+ 15,000,000
------------------------------------------------------
1,000,000 Massachusetts HEFA Weekly VRDNs (Series D)/
(Loan Capital Asset Program)/(MBIA Insured) VMIG1 1,000,000
------------------------------------------------------
5,000,000 Massachusetts HFA, SFH, 3.05% Semi-Annual TOBs (Series
33)/(FGIC Insured), Mandatory Tender 12/1/94 A-1+ 5,000,000
------------------------------------------------------ --------------
Total 44,000,000
------------------------------------------------------ --------------
MICHIGAN--1.2%
------------------------------------------------------
14,800,000 Michigan State Hospital Finance Authority Weekly VRDNs
(Series A)/(Sisters of the Third Order of St.
Francis)/(Swiss Bank Corp. LOC) P-1 14,800,000
------------------------------------------------------ --------------
MINNESOTA--7.5%
------------------------------------------------------
5,400,000 Minneapolis, MN, Hospital Revenue Daily VRDNs
(Minneapolis Children's Medical Center)/(Morgan
Guaranty Trust Co. LOC) A-1+ 5,400,000
------------------------------------------------------
2,550,000 Minnesota State Higher Education Facility Authority
Weekly VRDNs (Supplemental Student Loan Program)/
(Mitsubishi Bank Ltd. LOC) VMIG1 2,550,000
------------------------------------------------------
5,340,000 Minnesota State Weekly VRDNs P-Floats VMIG1 5,340,000
------------------------------------------------------
3,400,000 Minnesota State Weekly VRDNs P-Floats VMIG1 3,400,000
------------------------------------------------------
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
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MINNESOTA--CONTINUED
------------------------------------------------------
$10,720,000 Olmsted County, MN, COPs, Building Authority Weekly
VRDNs (Human Services Infrastructure)/(Sanwa Bank Ltd.
LOC) A-1+ $ 10,720,000
------------------------------------------------------
19,000,000 Rochester, MN, Health Care Facility Authority Weekly
VRDNs (Mayo Clinic Foundation Guaranty) A-1+ 19,000,000
------------------------------------------------------
19,900,000 Rochester, MN, Health Care Facility Weekly VRDNs (Mayo
Clinic Foundation Guaranty) A-1+ 19,900,000
------------------------------------------------------
9,300,000 Rochester, MN, Health Care Facility, 2.50% CP (Series
C)/(Mayo Clinic Foundation Guaranty) Mandatory Tender
7/15/94 A-1+ 9,300,000
------------------------------------------------------
13,000,000 Rosemount, MN, PCR Weekly VRDNs (Series 1984)/ (Koch
Refining Co. Guaranty) A-1+ 13,000,000
------------------------------------------------------
1,065,000 Saint Louis Park Hennepin County, MN, Weekly VRDNs A-1+ 1,065,000
------------------------------------------------------
1,000,000 Saint Louis Park Hennepin County, MN, Weekly VRDNs
(Series A) A-1+ 1,000,000
------------------------------------------------------ --------------
Total 90,675,000
------------------------------------------------------ --------------
MISSOURI--1.2%
------------------------------------------------------
7,000,000 Missouri State Environmental Improvement & Energy
Authority Weekly VRDNs (Series 1993M)/(Associated
Electric Cooperative Inc.)/(NRUCFC Guaranty) A-1+ 7,000,000
------------------------------------------------------
5,000,000 Missouri State Environmental Improvement & Energy
Authority, 2.65% Annual TOBs (Union Electric Co.)/
(Union Bank of Switzerland LOC), Optional Tender
6/1/94 A-1+ 5,000,000
------------------------------------------------------
3,000,000 Missouri State HEFA Daily VRDNs (Washington University
Guaranty) A-1+ 3,000,000
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Total 15,000,000
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
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MONTANA--1.2%
------------------------------------------------------
$ 9,700,000 Forsyth, Rosebud County, MT, PCR, 2.75% CP
(Pacificorp, Inc.)/(Industrial Bank of Japan, Ltd.
LOC), Mandatory Tender 6/16/94 A-1 $ 9,700,000
------------------------------------------------------
4,900,000 Forsyth, Rosebud County, MT, PCR, 3.30% CP
(Pacificorp, Inc.)/(Industrial Bank of Japan, Ltd.
LOC), Mandatory Tender 7/21/94 A-1+ 4,900,000
------------------------------------------------------ --------------
Total 14,600,000
------------------------------------------------------ --------------
NEW JERSEY--3.0%
------------------------------------------------------
1,400,000 Mercer County, NJ, Improvement Authority Weekly VRDNs
(Credit Suisse LOC) A-1+ 1,400,000
------------------------------------------------------
35,000,000 New Jersey State, 3.00% TRANs (Series 1992B), 6/15/94 SP-1+ 35,012,024
------------------------------------------------------ --------------
Total 36,412,024
------------------------------------------------------ --------------
NEW MEXICO--1.0%
------------------------------------------------------
12,300,000 Albuquerque, NM, Municipal Gross Receipt Tax Revenue
Weekly VRDNs MIG1 12,300,000
------------------------------------------------------ --------------
NEW YORK--1.2%
------------------------------------------------------
15,000,000 Suffolk County, NY, 2.70% TANs (Series 1994I)/
(Mitsubishi Bank Ltd. LOC), 8/16/94 MIG1 15,020,103
------------------------------------------------------ --------------
NORTH CAROLINA--7.2%
------------------------------------------------------
4,918,585 Charlotte, NC, Weekly VRDNs Floating Rate Trust
Certificate (Series 1992)/(Credit Suisse Financial
Products BPA) P-1 4,918,585
------------------------------------------------------
20,000,000 Martin County, NC, IFA Weekly VRDNs (Series 1993)/
(Weyerhauser, Inc. Guaranty) A-1 20,000,000
------------------------------------------------------
51,450,000 NCNB Pooled Tax-Exempt Trust Weekly VRDNs
(Series 1990A)/(NationsBank of North Carolina
N.A. LOC) P-1 51,450,000
------------------------------------------------------
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
------------------------------------------------------
$ 815,000 North Carolina Medical Care Commission Hospital Weekly
VRDNs (Series 1986AZ)/(MBIA Insured)/ (Banque Paribas
BPA) VMIG1 $ 815,000
------------------------------------------------------
10,000,000 University of North Carolina at Chapel Hill Utilities
System Revenue Bonds Weekly VRDNs P-Floats (Series
1993) VMIG1 10,000,000
------------------------------------------------------ --------------
Total 87,183,585
------------------------------------------------------ --------------
OHIO--3.6%
------------------------------------------------------
5,000,000 Cleveland, OH, City School District, 4.50% TRANs
(Series 1994)/(Canadian Imperial Bank of Commerce
LOC), 12/30/94 SP-1+ 5,039,692
------------------------------------------------------
5,000,000 Cleveland-Cuyahoga County, OH, Port Authority Weekly
VRDNs (Series 1993)/(Rock and Roll Hall of Fame &
Museum)/(Credit Local De France LOC) A-1+ 5,000,000
------------------------------------------------------
2,900,000 Columbus, OH, Sewer System Revenue Bonds Weekly VRDNs
(Series 1994) VMIG1 2,900,000
------------------------------------------------------
3,955,000 Franklin County, OH, Healthcare Facilities Weekly
VRDNs (Series 1992)/(Wesley Glenn, Inc.)/(Fifth Third
Bank LOC) VMIG1 3,955,000
------------------------------------------------------
1,150,000 Hamilton County, OH, Health Care System Weekly VRDNs
(West Park Retirement Community, Inc.)/
(Fifth Third Bank LOC) VMIG1 1,150,000
------------------------------------------------------
13,500,000 Hamilton County, OH, Hospital Authority Revenue Bonds
Weekly VRDNs (Series 1986A)/(Good Samaritan Hospital
Guaranty) A-1 13,500,000
------------------------------------------------------
3,940,000 Marion County, OH, Hospital Authority, 3.25%
Semi-Annual TOBs (Series 1991)/(Pooled Lease
Program)/(Bank One, Columbus N.A. LOC), Optional
Tender 11/1/94 A-1+ 3,940,000
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SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------
$ 2,450,000 Ohio State Public Facilities Commission Weekly VRDNs
(Series 1993II)/(AMBAC Insured) VMIG1 $ 2,450,000
------------------------------------------------------
5,500,000 University of Cincinnati, OH, 4.00% BANs (Series K1),
3/23/95 SP-1+ 5,532,272
------------------------------------------------------ --------------
Total 43,466,964
------------------------------------------------------ --------------
OKLAHOMA--0.6%
------------------------------------------------------
2,900,000 Muskogee, OK, Industrial Trust Weekly VRDNs
(Series 1985)/(Muskogee Mall Limited Partnership)/
(Boatmens National Bank LOC) VMIG1 2,900,000
------------------------------------------------------
4,110,000 Muskogee, OK, Industrial Trust Weekly VRDNs
(Series 1985)/(Warmack-Muskogee Limited Partnership)/
(Boatmens National Bank LOC) VMIG1 4,110,000
------------------------------------------------------ --------------
Total 7,010,000
------------------------------------------------------ --------------
PENNSYLVANIA--6.4%
------------------------------------------------------
3,000,000 Authority for Improvements in Municipalities, PA,
Weekly VRDNs (Pooled Hospital & Equipment Leasing
Program)/(MBIA Insured) VMIG1 3,000,000
------------------------------------------------------
9,400,000 Commonwealth of Pennsylvania, 3.25% TANs, 6/30/94 SP-1+ 9,404,225
------------------------------------------------------
7,100,000 Dauphin County, PA, General Authority Hospital Revenue
Bonds Weekly VRDNs (Jamison Memorial
Hospital)/(Toronto-Dominion Bank LOC) A-1+ 7,100,000
------------------------------------------------------
6,000,000 Delaware County, PA, PCA, 3.15% CP (Series C)/
(Philadelphia Electric Company)/(FGIC Insured),
Mandatory Tender 9/22/94 A-1+ 6,000,000
------------------------------------------------------
11,000,000 Delaware County, PA, PCA, 3.15% CP (Series C)/
(Philadelphia Electric Company)/(FGIC Insured),
Mandatory Tender 9/23/94 A-1+ 11,000,000
------------------------------------------------------
11,900,000 Erie County, PA, Hospital Authority Weekly VRDNs (St.
Vincent Health System)/(Fuji Bank Ltd. LOC) A-1 11,900,000
------------------------------------------------------
</TABLE>
FEDERATED TAX-FREE TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
PENNSYLVANIA--CONTINUED
------------------------------------------------------
$ 4,200,000 Geisinger Authority, Pennsylvania Health System Daily
VRDNs (Series 1992B)/(Geisinger Guaranty) A-1+ $ 4,200,000
------------------------------------------------------
2,600,000 Montgomery County, PA, IDA Weekly VRDNs
(Series 1984)/(General Signal Corp.)/(Morgan Guaranty
Trust Co. LOC) P-1 2,600,000
------------------------------------------------------
9,000,000 Pennsylvania State University, 3.00% BANs
(Series 1993B), 12/5/94 SP-1+ 9,012,114
------------------------------------------------------
13,500,000 Philadelphia, PA, 3.25% TANs (Series A)/(Canadian
Imperial Bank of Commerce LOC), 6/15/94 A-1 13,502,376
------------------------------------------------------ --------------
Total 77,718,715
------------------------------------------------------ --------------
PUERTO RICO--0.6%
------------------------------------------------------
7,400,000 Government Development Bank of Puerto Rico Weekly
VRDNs (Credit Suisse and Sumitomo Bank, Ltd. LOCs) A-1 7,400,000
------------------------------------------------------ --------------
SOUTH CAROLINA--2.1%
------------------------------------------------------
15,000,000 Greenville, SC, Hospital System Board of Trustees
Weekly VRDNs (Series 1993B) A-1+ 15,000,000
------------------------------------------------------
10,000,000 York County, SC, PCR, 3.05% Semi-Annual TOBs (Series
1984N)/(NC Electric Membership Corp.)/ (NRUCFC
Guaranty), Optional Tender 9/15/94 A-1+ 10,000,000
------------------------------------------------------ --------------
Total 25,000,000
------------------------------------------------------ --------------
SOUTH DAKOTA--0.4%
------------------------------------------------------
5,000,000 South Dakota Housing Development Authority, 3.30%
Annual TOBs (Series 1994C) Mandatory Tender 4/6/95 A-1+ 5,000,000
------------------------------------------------------ --------------
TENNESSEE--4.8%
------------------------------------------------------
25,000,000 Chattanooga, TN, HEFA Weekly VRDNs (McCallie
School)/(Trust Company Bank LOC) A-1+ 25,000,000
------------------------------------------------------
</TABLE>
FEDERATED TAX-FREE TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
TENNESSEE--CONTINUED
------------------------------------------------------
$14,000,000 Chattanooga, TN, HEFA Weekly VRDNs (Siskin Hospital
for Physical Rehabilitation, Inc.)/(Sumitomo Bank Ltd.
LOC) P-1 $ 14,000,000
------------------------------------------------------
5,800,000 Chattanooga-Hamilton County, TN, Hospital Authority
Daily VRDNs (Erlanger Medical Center Guaranty) A-1 5,800,000
------------------------------------------------------
5,000,000 Nashville & Davidson, TN, HEFA, 3.55% Annual TOBs
(Series 1985B)/(Vanderbilt University Guaranty)
Optional Tender 5/1/95 A-1+ 5,000,000
------------------------------------------------------
7,995,000 Shelby County, TN, 3.10% Health, Education & Housing
Facility Annual TOBs (MBIA Insured), Optional Tender
8/1/94 A-1+ 7,995,000
------------------------------------------------------ --------------
Total 57,795,000
------------------------------------------------------ --------------
TEXAS--7.2%
------------------------------------------------------
5,000,000 Dallas County, TX, 2.70% Annual TOBs (Series C),
Optional Tender 6/15/94 A-1+ 5,000,000
------------------------------------------------------
4,500,000 El Paso, TX, HFDC Daily VRDNs (Providence Memorial
Hospital)/(Fuji Bank Ltd. LOC) VMIG1 4,500,000
------------------------------------------------------
4,875,000 Grapevine, TX, IDC Airport Improvement, 3.50% Annual
TOBs (Series 1983A)/(Singer Company)/(Bank of Montreal
LOC), Optional Tender 4/1/95 A-1+ 4,875,000
------------------------------------------------------
1,500,000 Harris County, TX, HFDC Daily VRDNs (Series D)/
(St. Luke's Episcopal Hospital Guaranty) A-1+ 1,500,000
------------------------------------------------------
5,000,000 Houston, TX, HFDC Daily VRDNs (Methodist Hospital
Guaranty) A-1+ 5,000,000
------------------------------------------------------
1,600,000 Houston, TX, HFDC Daily VRDNs (Methodist Hospital
Guaranty) A-1+ 1,600,000
------------------------------------------------------
9,200,000 Houston, TX, HFDC Daily VRDNs (Methodist Hospital
Guaranty) A-1+ 9,200,000
------------------------------------------------------
</TABLE>
FEDERATED TAX-FREE TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
TEXAS--CONTINUED
------------------------------------------------------
$ 5,000,000 Sulfur Springs, TX, IDA Weekly VRDNs (Hun
Industries)/(Credit Suisse LOC) A-1+ $ 5,000,000
------------------------------------------------------
5,000,000 Texas State Public Finance Authority Equipment, 3.00%
SB (Series 1993A), 8/1/94 NR(3) 5,000,000
------------------------------------------------------
15,000,000 Texas State Public Finance Authority, 2.50% CP (Series
1993A), Mandatory Tender 10/27/94 A-1+ 15,000,000
------------------------------------------------------
27,000,000 Texas State, 3.25% TRANs (Series 1993), 8/31/94 SP-1+ 27,030,899
------------------------------------------------------
3,100,000 Texas Water Development Board Daily VRDNs (Series
A)/(Capital Asset Program)/(Canadian Imperial Bank of
Commerce LOC) A-1+ 3,100,000
------------------------------------------------------ --------------
Total 86,805,899
------------------------------------------------------ --------------
UTAH--1.1%
------------------------------------------------------
10,400,000 Intermountain Power Agency, UT, 2.70% Annual TOBs,
Optional Tender 6/15/94 A-1 10,400,000
------------------------------------------------------
3,000,000 Intermountain Power Agency, UT, 3.00% Semi-Annual
TOBs, Optional Tender 9/15/94 A-1 3,000,000
------------------------------------------------------ --------------
Total 13,400,000
------------------------------------------------------ --------------
VERMONT--0.7%
------------------------------------------------------
8,000,000 Vermont IDA Weekly VRDNs (Wallace Computer
Services, Inc.)/(Wachovia Bank & Trust Co. LOC) A-1+ 8,000,000
------------------------------------------------------ --------------
VIRGINIA--2.0%
------------------------------------------------------
4,460,000 Chesapeake Bay Bridge & Tunnel District, VA, General
Resolution Revenue Bonds Weekly VRDNs P-Floats (Series
1991)/(MBIA Insured) VMIG1 4,460,000
------------------------------------------------------
4,000,000 Chesapeake Bay Bridge & Tunnel District, VA, General
Resolution Revenue Bonds Weekly VRDNs P-Floats
(Series 1991)/(MBIA Insured) VMIG1 4,000,000
------------------------------------------------------
</TABLE>
FEDERATED TAX-FREE TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
VIRGINIA--CONTINUED
------------------------------------------------------
$ 8,280,000 Fairfax County, VA, Water Authority Refunding Revenue
Bonds Weekly VRDNs P-Floats (Series 1992) VMIG1 $ 8,280,000
------------------------------------------------------
8,000,000 Virginia State Housing Development Authority, 2.80%
Annual TOBs (Series 1993A), Mandatory Tender 11/4/94 SP-1+ 8,000,000
------------------------------------------------------ --------------
Total 24,740,000
------------------------------------------------------ --------------
WASHINGTON--1.8%
------------------------------------------------------
10,000,000 Washington State, 3.65% GO Semi-Annual TOBs (Series
HH-2 & 1994B), Optional Tender 11/2/94 A-1+ 10,000,000
------------------------------------------------------
12,000,000 Washington State, GO Bonds Weekly VRDNs (Series 1994A) A-1 12,000,000
------------------------------------------------------ --------------
Total 22,000,000
------------------------------------------------------ --------------
WEST VIRGINIA--0.5%
------------------------------------------------------
5,430,000 West Virginia University Board of Regents, 2.75%
Annual TOBs (Morgan Guaranty Trust Co., New York LOC),
Optional Tender 2/1/95 A-1+ 5,430,000
------------------------------------------------------ --------------
WISCONSIN--0.9%
------------------------------------------------------
5,000,000 Hartford, WI, IDA Weekly VRDNs (IC Products Co.)/ (PNC
Bank N.A. LOC) A-1 5,000,000
------------------------------------------------------
6,000,000 Wisconsin HEFA Weekly VRDNs (St. Luke's Medical
Center)/(Sumitomo Bank Ltd. LOC) VMIG1 6,000,000
------------------------------------------------------ --------------
Total 11,000,000
------------------------------------------------------ --------------
</TABLE>
FEDERATED TAX-FREE TRUST
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ----------- ------------------------------------------------------ -------- --------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- ---------------------------------------------------------------------
WYOMING--2.2%
------------------------------------------------------
$ 5,125,000 Lincoln County, WY, PCR, 3.00% Semi-Annual TOBs (Amoco
Oil Corp. Guaranty), Mandatory Tender 10/1/94 A-1+ $ 5,125,000
------------------------------------------------------
5,000,000 Unita County, WY, PCR, 2.90% Annual TOBs (Amoco Oil
Corp. Guaranty), Optional Tender 12/1/94 A-1+ 5,000,000
------------------------------------------------------
8,870,000 Wyoming Community Development Authority, SFM, 2.60%
Semi-Annual TOBs (Series 1986C), Optional Tender
6/1/94 NR(2) 8,870,000
------------------------------------------------------
8,210,000 Wyoming Community Development Authority, SFM, 3.40%
Semi-Annual TOBs (Series 1986C), Optional Tender
12/1/94 NR(2) 8,210,000
------------------------------------------------------ --------------
Total 27,205,000
------------------------------------------------------ --------------
OTHER--2.4%
------------------------------------------------------
15,000,000 Clipper Tax Exempt Trust, Weekly VRDNs (Series 1993-1) A-1+ 15,000,000
------------------------------------------------------
14,023,287 LaSalle National Bank Bustops Trust Weekly VRDNs
(Series 1993A)/(LaSalle National Bank BPA) A-1+ 14,023,287
------------------------------------------------------ --------------
Total 29,023,287
------------------------------------------------------ --------------
TOTAL INVESTMENTS, AT AMORTIZED COST (NOTE 2A) $1,233,083,927+
------------------------------------------------------ --------------
</TABLE>
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($1,212,892,157) at May 31, 1994.
FEDERATED TAX-FREE TRUST
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation
BANs -- Bond Anticipation Notes
BPA -- Bond Purchase Agreement
COPs -- Certificates of Participation
CP -- Commercial Paper
EDA -- Economic Development Authority
EDR -- Economic Development Revenue
EDRB -- Economic Development Revenue Bonds
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
GO -- General Obligation
HEFA -- Health and Education Facilities Authority
HFA -- Housing Finance Authority/Agency
HFDC -- Health Facility Development Corporation
IDA -- Industrial Development Authority
IDB -- Industrial Development Bond
IDC -- Industrial Development Corporation
IDR -- Industrial Development Revenue
IFA -- Industrial Finance Authority/Agency
LOC -- Letter of Credit
LOCs -- Letters of Credit
MBIA -- Municipal Bond Investors Assurance
NRUCFC -- National Rural Utilities Cooperative Finance Corporation
PCA -- Pollution Control Authority
PCR -- Pollution Control Revenue
RANs -- Revenue Anticipation Notes
SB -- Serial Bond
SFH -- Single Family Housing
SFM -- Single Family Mortgage
TANs -- Tax Anticipation Notes
TOBs -- Tender Option Bonds
TRANs -- Tax and Revenue Anticipation Notes
VRDNs -- Variable Rate Demand Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED TAX-FREE TRUST
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------
Investments, at amortized cost and value (Note 2A) $1,233,083,927
- ------------------------------------------------------------------------------
Cash 4,691,223
- ------------------------------------------------------------------------------
Interest receivable 8,797,334
- ------------------------------------------------------------------------------
Receivable for Trust shares sold 2,947
- ------------------------------------------------------------------------------ --------------
Total assets 1,246,575,431
- ------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------
Payable for investments purchased $30,710,000
- ----------------------------------------------------------------
Dividends payable 2,256,954
- ----------------------------------------------------------------
Payable for Trust shares repurchased 503,124
- ----------------------------------------------------------------
Accrued expenses 213,196
- ---------------------------------------------------------------- -----------
Total liabilities 33,683,274
- ------------------------------------------------------------------------------ --------------
NET ASSETS $1,212,892,157
- ------------------------------------------------------------------------------ --------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------
Paid-in capital $1,212,909,886
- ------------------------------------------------------------------------------
Accumulated net realized loss on investments (17,729)
- ------------------------------------------------------------------------------ --------------
NET ASSETS FOR 1,212,909,886 shares of beneficial interest
outstanding $1,212,892,157
- ------------------------------------------------------------------------------ --------------
NET ASSET VALUE, Offering Price, and Redemption Price Per Share
($1,212,892,157 / 1,212,909,886 shares of beneficial interest outstanding) $ 1.00
- ------------------------------------------------------------------------------ --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED TAX-FREE TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income (Note 2B) $17,262,348
- ---------------------------------------------------------------------------------
EXPENSES--
- ---------------------------------------------------------------------------------
Investment advisory fee (Note 4) $2,719,758
- --------------------------------------------------------------------
Trustees' fees 7,480
- --------------------------------------------------------------------
Administrative personnel and services (Note 4) 428,615
- --------------------------------------------------------------------
Custodian and portfolio accounting fees 148,396
- --------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses (Note 4) 23,629
- --------------------------------------------------------------------
Shareholder services fee (Note 4) 170,355
- --------------------------------------------------------------------
Trust share registration costs 2,369
- --------------------------------------------------------------------
Auditing fees 19,615
- --------------------------------------------------------------------
Legal fees 10,728
- --------------------------------------------------------------------
Printing and postage 8,096
- --------------------------------------------------------------------
State and local taxes 13,528
- --------------------------------------------------------------------
Miscellaneous 10,955
- -------------------------------------------------------------------- ----------
Total expenses 3,563,524
- --------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (Note 4) 488,400
- -------------------------------------------------------------------- ----------
Net expenses 3,075,124
- --------------------------------------------------------------------------------- -----------
Net investment income 14,187,224
- ---------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) (9,870)
- --------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $14,177,354
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
FEDERATED TAX-FREE TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
<S> <C> <C>
1994* 1993
--------------- ---------------
INCREASE (DECREASE) IN NET ASSETS:
- ------------------------------------------------------------
OPERATIONS--
- ------------------------------------------------------------
Net investment income $ 14,187,224 $ 31,490,990
- ------------------------------------------------------------
Net realized gain (loss) on investments ($9,870 net loss and
$65,014 net gain respectively, as computed for federal tax
purposes) (9,870) 65,014
- ------------------------------------------------------------ --------------- ---------------
Change in net assets resulting from operations 14,177,354 31,556,004
- ------------------------------------------------------------ --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS (NOTE 2B)--
- ------------------------------------------------------------
Dividends to shareholders from net investment income (14,187,224) (31,490,990)
- ------------------------------------------------------------ --------------- ---------------
TRUST SHARE (PRINCIPAL) TRANSACTIONS (NOTE 3)--
- ------------------------------------------------------------
Proceeds from sale of shares 2,617,123,416 5,274,099,768
- ------------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 1,604,571 3,038,789
- ------------------------------------------------------------
Cost of shares redeemed (2,752,617,030) (5,454,000,028)
- ------------------------------------------------------------ --------------- ---------------
Change in net assets resulting from Trust share
transactions (133,889,043) (176,861,471)
- ------------------------------------------------------------ --------------- ---------------
Change in net assets (133,898,913) (176,796,457)
- ------------------------------------------------------------
NET ASSETS:
- ------------------------------------------------------------
Beginning of period 1,346,791,070 1,523,587,527
- ------------------------------------------------------------ --------------- ---------------
End of period $ 1,212,892,157 $ 1,346,791,070
- ------------------------------------------------------------ --------------- ---------------
</TABLE>
* Six months ended May 31, 1994 (unaudited).
(See Notes which are an integral part of the Financial Statements)
FEDERATED TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
------------------------------------------------------------------------------------------------------------------
1994** 1993 1992 1991 1990 1989 1988 1987 1986 1985
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
NET ASSET
VALUE,
BEGINNING OF
PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------
INCOME FROM
INVESTMENT
OPERATIONS
- ------------
Net
investment
income 0.01 0.02 0.03 0.04 0.06 0.06 0.05 0.04 0.04 0.05
- ------------
LESS
DISTRIBUTIONS
- ------------
Dividends
to
shareholders
from net
investment
income (0.01) (0.02) (0.03) (0.04) (0.06) (0.06) (0.05) (0.04) (0.04) (0.05)
- ------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
NET ASSET
VALUE, END
OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
TOTAL
RETURN* 1.05% 2.18% 2.88% 4.49% 5.68% 6.03% 4.87% 4.11% 4.43% 4.95%
- ------------
RATIOS TO
AVERAGE
NET ASSETS
- ------------
Expenses 0.45%(b) 0.46% 0.46% 0.46% 0.45% 0.45% 0.45% 0.44% 0.45% 0.45%
- ------------
Net
investment
income 2.09%(b) 2.16% 2.84% 4.40% 5.54% 5.86% 4.74% 4.01% 4.31% 4.82%
- ------------
Expense
waiver/
reimbursement (a) 0.07%(b) 0.03% -- -- -- -- -- 0.01% -- --
- ------------
SUPPLEMENTAL
DATA
- ------------
Net assets,
end of
period (000
omitted) $1,212,892 $1,346,791 $1,523,588 $1,720,730 $1,887,467 $2,140,368 $2,618,595 $2,997,042 $4,119,247 $3,533,028
- ------------
</TABLE>
* Based on net asset value which does not reflect the sales load or contingent
deferred sales charge, if applicable.
** Six months ended May 31, 1994 (unaudited).
(a) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above (Note 4).
(b) Computed on an annualized basis.
(See Notes which are an integral part of the Financial Statements)
FEDERATED TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1994
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
The Trust is registered under the Investment Company Act of 1940, as amended
(the "Act"), as a diversified, open-end, no-load, management investment company.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--The Trust's use of the amortized cost method to value
its portfolio securities is in accordance with Rule 2a-7 under the Act.
B. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount are amortized as required by the
Internal Revenue Code, as amended (the "Code"). Distributions to shareholders
are recorded on the ex-dividend date .
C. FEDERAL TAXES--It is the Trust's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its tax-exempt income.
Accordingly, no provisions for federal tax are necessary.
At November 30, 1993, the Trust, for federal tax purposes, had a capital loss
carryforward of $7,859, which will reduce the Trust's taxable income arising
from future net realized gain on investments, if any, to the extent permitted
by the Code, and thus will reduce the amount of the distributions to
shareholders which would otherwise be necessary to relieve the Trust of any
liability for federal tax. Pursuant to the Code, such capital loss
carryforward will expire in 1995.
D. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. A Trust records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis
are marked to market daily and begin earning interest on the settlement date.
E. OTHER--Investment transactions are accounted for on the trade date.
FEDERATED TAX-FREE TRUST
- --------------------------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Trust shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
<S> <C> <C>
1994* 1993
- ------------------------------------------------------------- -------------- --------------
Shares sold 2,617,123,416.. 5,274,099,768
- -------------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 1,604,571 3,038,789
- -------------------------------------------------------------
Shares redeemed (2,752,617,030) (5,454,000,028)
- ------------------------------------------------------------- -------------- --------------
Net change resulting from Trust share transactions (133,889,043) (176,861,471)
- ------------------------------------------------------------- -------------- --------------
*Six months ended May 31, 1994.
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Research, the Trust's investment adviser (the
"Adviser"), receives for its services an annual investment advisory fee equal to
.40 of 1% of the Trust's average daily net assets. Adviser will waive, to the
extent of its advisory fee, the amount, if any, by which the Trust's aggregate
annual operating expenses (excluding interest, taxes, brokerage commissions,
expenses of registering and qualifying the Trust and its shares under federal
and state laws, expenses of withholding taxes, and extraordinary expenses)
exceeded .45 of 1% of average daily net assets of the Trust.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Trust
administrative personnel and services. Prior to March 1, 1994, these services
were provided at approximate cost. Effective March 1, 1994, the FAS fee is based
on the level of average aggregate daily net assets of all funds advised by
subsidiaries of Federated Investors for the period. The administrative fee
received during any fiscal year shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
SHAREHOLDER SERVICES FEE-- Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), the Trust will pay FSS up to .25 of
1% of average net assets of the Trust for the period. This fee is to obtain
certain personal services for shareholders and the maintenance of shareholder
accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
('FServ") serves as transfer and dividend disbursing agent for the Trust. The
FServ fee is based on the size, type and number of accounts and transactions
made by shareholders.
FEDERATED TAX-FREE TRUST
- --------------------------------------------------------------------------------
INTERFUND TRANSACTIONS--During the six months ended May 31, 1994, the Trust
engaged in purchase and sale transactions with other affiliated funds pursuant
to Rule 17a-7 under the Act, amounting to $573,750,000 and $522,069,292,
respectively. These purchases and sales were conducted on an arms length basis
and transacted for cash consideration only, at independent current market
prices, and without brokerage commissions, fees or other remuneration.
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
John F. Donahue
John F. Donahue
Chairman
John T. Conroy, Jr.
Glen R. Johnson
William J. Copeland
President
James E. Dowd
J. Christopher Donahue
Lawrence D. Ellis, M.D.
Vice President
Edward L. Flaherty, Jr.
Edward C. Gonzales
Vice President and Treasurer
Peter E. Madden
John W. McGonigle
Gregor F. Meyer
Vice President and Secretary
Wesley W. Posvar
Richard B. Fisher
Marjorie P. Smuts
Vice President
David M. Taylor
Assistant Treasurer
S. Elliott Cohan
Assistant Secretary
Mutual funds are not obligations of or insured by any bank, nor are they insured
by the federal government or any of its agencies.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Trust's prospectus, which contains facts
concerning its objective and policies, management fees, expenses and other
information.
