PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder,
I am pleased to present the Semi-Annual Report to Shareholders for Federated
Tax-Free Trust, covering the six-month period ended May 31, 1995. This report
features our customary Investment Review from the trust's portfolio manager,
followed by the Trust's Portfolio of Investments and Financial Statements.
Federated Tax-Free Trust continues to serve as an excellent vehicle for
investors seeking a combination of competitive, tax-free income with liquidity
and stability of principal.* The Trust pursues these goals for investors by
maintaining a diversified portfolio of municipal securities from all across the
country.
At the end of the period, the Trust's net assets stand at just under $955
million. Distributions paid to shareholders totaled $20.5 million, or $0.02 per
share.
Thank you for your continued confidence in Federated Tax-Free Trust. We will
continue to keep you updated on your investment, and we welcome your comments or
questions.
Sincerely,
[LOGO]
Glen R. Johnson
President
July 14, 1995
* FOR A FEW INVESTORS, INCOME MAY BE SUBJECT TO THE FEDERAL ALTERNATIVE MINIMUM
TAX. INCOME MAY ALSO BE SUBJECT TO STATE AND LOCAL TAXES. ALTHOUGH THE TRUST
SEEKS TO MAINTAIN A $1.00 PER SHARE VALUE, THERE IS NO ASSURANCE THAT IT WILL
BE ABLE TO DO SO. AN INVESTMENT IN THE TRUST IS NEITHER INSURED NOR GUARANTEED
BY ANY BANK AND IS NOT INSURED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT
AGENCY.
1
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Federated Tax-Free Trust, which is rated AAAm* by Standard & Poor's Ratings
Group is invested in high quality short-term tax-free securities and seeks to
maintain a constant net asset value of $1.00 per share. For the six month period
ended May 31, 1995, the Trust paid shareholders a net annualized total return of
3.65%.** This is equivalent to a taxable money market fund total return in the
highest federal bracket of 39.6% of 6.0%.
Concerned by the strength in the economy and the potential for this growth to
create inflationary pressures, the Board of Governors of the Federal Reserve
System (the "Fed") continued to tighten monetary policy through the fourth
quarter of 1994 and into early 1995. The move by the Fed on February 1, 1995,
increased the federal funds target rate by 50 basis points to 6.0%. Since
February, however, there has been an outpouring of sluggish economic data
suggesting that the 1994-1995 tightening cycle by the Fed is starting to take
hold. As a result, market participants took these signs of slowing, coupled with
a modest acceleration in inflation, to mean that the Fed would not increase
rates further and perhaps move to cut borrowing costs if the downturn in
economic growth continues.
Money market rates were affected by the Fed's tightening early in the period, as
well as the 180 degree change in market expectations in February regarding
future Fed rate moves. Municipal money market rates were also influenced by
seasonal supply and demand imbalances throughout the reporting period. One-year
treasury bills rose from 6.88% in November to a period high of 7.32% before
declining sharply to 5.80% to end the period. Short-term municipal note rates
declined as well, but to a lesser degree. Yield levels on the Bond Buyer Note
Index,*** a proxy for one-year municipal notes offered in the marketplace,
initially moved upward increasing from 4.60% in December 1994 to a high of 5.10%
in early January 1995 before steadily falling to 3.90% at the end of the period.
In this interest rate environment, the Trust's average maturity was in a neutral
average maturity range of 40-50 days. Looking ahead to the second half of 1995,
the Trust's management expects the economy to moderate. Short-term interest
rates should trade in a fairly narrow range based on expectations of a steady
monetary policy. However, a cut in short-term rates cannot be ruled out. The Fed
will scrutinize upcoming economic data on the economy for signs that growth
remains weak.
* RATINGS ARE SUBJECT TO CHANGE.
** PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE PERFORMANCE.
*** THIS INDEX IS UNMANAGED.
2
FEDERATED TAX-FREE TRUST
PORTFOLIO OF INVESTMENTS
MAY 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--100.5%
- -------------------------------------------------------------------------------
ALABAMA--1.0%
------------------------------------------------------------
$ 4,100,000 Birmingham, AL, Medical Clinic Board Daily VRDNs (University
of Alabama Health System)/(Morgan Guaranty Trust Co., New
York LOC) A-1+ $ 4,100,000
------------------------------------------------------------
1,100,000 Huntsville, AL, Health Care Authority/Health Care
Facilities, (Series 1994A) Weekly VRDNs (MBIA INS)/ (Amsouth
Bank N.A., Birmingham LIQ) A-1 1,100,000
------------------------------------------------------------
2,925,000 Marshall County, AL, Special Obligation School Refunding
Warrant (Series 1994) Weekly VRDNs (Marshall County, AL
Board of Education)/(First Alabama Bank, Birmingham LOC) A-1+ 2,925,000
------------------------------------------------------------
1,000,000 Montgomery, AL, BMC Special Care Facilities Finance
Authority, (Series 94A) Weekly VRDNs (Baptist Medical
Center, AL)/(Amsouth Bank N.A., Birmingham LOC) VMIG1 1,000,000
------------------------------------------------------------ ------------
Total 9,125,000
------------------------------------------------------------ ------------
ARIZONA--0.5%
------------------------------------------------------------
4,400,000 Pinal County, AZ, IDA, Adjustable Rate Pollution Control
Revenue Bonds Daily VRDNs (Magma Copper Co.)/(National
Westminster Bank, PLC, London LOC) A-1+ 4,400,000
------------------------------------------------------------ ------------
ARKANSAS--0.2%
------------------------------------------------------------
2,000,000 Arkansas Hospital Equipment Finance Authority, (Series 85)
Weekly VRDNs (Credit Suisse, Zurich LOC) A-1+ 2,000,000
------------------------------------------------------------ ------------
CALIFORNIA--9.0%
------------------------------------------------------------
10,000,000 California State, (Series C) Monthly VRDNs SP-1+ 10,000,000
------------------------------------------------------------
10,500,000 California State, 4.25% TOBs (FGIC INS)/(Banque Nationale de
Paris LIQ), Optional Tender 11/1/1995 VMIG1 10,500,000
------------------------------------------------------------
10,000,000 California Student Loan, Revenue Bond (Series B), 3.90% TOBs
(Student Loan Marketing Association LOC), Mandatory Tender
7/1/1995 VMIG1 10,000,000
------------------------------------------------------------
</TABLE>
3
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
CALIFORNIA--CONTINUED
------------------------------------------------------------
$10,000,000 (a) Clipper CAL Tax-Exempt Trust, (94-2) Weekly VRDNs
(California State)/(State Street Bank and Trust Co. LIQ)/
(Bank of America NT and SA, San Francisco, Bank of Nova
Scotia, Toronto, Banque Nationale de Paris, Canadian
Imperial Bank of Commerce, Toronto, Chemical Bank, New York,
Citibank, NA, Credit Suisse, Zurich, Morgan Guaranty Trust
Co., New York, National Westminster Bank, PLC, London,
Societe Generale North America, Inc., Sumitomo Bank Ltd.,
Osaka, Swiss Bank Corp., New York, NY, Toronto-Dominion Bank
and Westdeutsche Landesbank Gironzentrale LOCs) VMIG1 $ 10,000,000
------------------------------------------------------------
18,950,000 Los Angeles County, CA, 4.50% TRANs, 6/30/1995 SP-1+ 18,959,421
------------------------------------------------------------
9,900,000 Los Angeles County, CA, Metropolitan Transportation
Authority, General Revenue Bonds, (Series 1995-A) Weekly
VRDNs (Union Station Gateway Project)/(FSA INS)/(Societe
Generale, Paris LIQ) A-1+ 9,900,000
------------------------------------------------------------
10,000,000 San Bernardino County, CA, Board of Education, 4.25% TRANs,
7/28/1995 SP-1+ 10,002,954
------------------------------------------------------------
7,000,000 Stanislaus County, CA, Office of Education, 4.25% TRANs,
7/10/1995 SP-1+ 7,003,960
------------------------------------------------------------ ------------
Total 86,366,335
------------------------------------------------------------ ------------
COLORADO--5.1%
------------------------------------------------------------
25,000,000 Arapahoe County, CO, Improvement Authority, (Series G),
4.45% TOBs (Swiss Bank Corp., New York, NY LOC), Optional
Tender 8/31/1995 SP-1+ 25,000,000
------------------------------------------------------------
2,500,000 Loveland, CO, IDR (Series 1993S), 3.95% TOBs (Safeway,
Inc.)/(Bankers Trust Co., New York LOC), Optional Tender
12/1/1995 A-1+ 2,500,000
------------------------------------------------------------
2,500,000 Loveland, CO, IDR (Series 1993S), 4.45% TOBs (Safeway,
Inc.)/(Bankers Trust Co., New York LOC), Optional Tender
6/1/1995 A-1+ 2,500,000
------------------------------------------------------------
</TABLE>
4
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
COLORADO--CONTINUED
------------------------------------------------------------
$19,000,000 Moffat County, CO, PCR (Series 1984) Weekly VRDNs (Columbus
UTE Electric Associates.)/(NRUCFC GTD) A-1 $ 19,000,000
------------------------------------------------------------ ------------
Total 49,000,000
------------------------------------------------------------ ------------
FLORIDA--2.3%
------------------------------------------------------------
3,800,000 Dade County, FL, HFA, Multi Family Adjustable Rate Mortgage
Revenue Bonds (1985 Series 5) Weekly VRDNs (Fairgreen
Apartments)/(Trust Company Bank, Atlanta LOC) A-1+ 3,800,000
------------------------------------------------------------
8,485,000 Fort Lauderdale, FL, Performing Arts Center Authority Weekly
VRDNs (Sun Bank NA, Orlando LOC) VMIG1 8,485,000
------------------------------------------------------------
10,000,000 Sunshine State Governmental Finance Commission, FL, 4.10% CP
(Morgan Guaranty Trust Co., New York, National Westminster
Bank, PLC, London and Union Bank of Switzerland, Zurich
LOCs), Mandatory Tender 7/25/1995 A-1+ 10,000,000
------------------------------------------------------------ ------------
Total 22,285,000
------------------------------------------------------------ ------------
GEORGIA--2.4%
------------------------------------------------------------
8,000,000 Albany-Dougherty County, GA, Hospital Authority, Refunding
Revenue Anticipation Certificates (Series 1991) Weekly VRDNs
(AMBAC INS)/(Credit Local de France LIQ) A-1 8,000,000
------------------------------------------------------------
3,185,000 Fulco, GA, Hospital Authority Weekly VRDNs (Piedmont
Hospital)/(Trust Company Bank, Atlanta LOC) A-1+ 3,185,000
------------------------------------------------------------
5,000,000 Fulton County, GA, Housing Authority, Multifamily Housing
Revenue Refunding Bonds (Series 1994) Weekly VRDNs (Spring
Creek Crossing Project)/ (Wachovia Bank of Georgia NA,
Atlanta LOC) A-1+ 5,000,000
------------------------------------------------------------
</TABLE>
5
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
GEORGIA--CONTINUED
------------------------------------------------------------
$ 7,000,000 Rockdale County, GA, Hospital Authority, Revenue
Anticipation Certificates (Series 1994) Weekly VRDNs (Trust
Company Bank, Atlanta LOC) VMIG1 $ 7,000,000
------------------------------------------------------------ ------------
Total 23,185,000
------------------------------------------------------------ ------------
ILLINOIS--7.0%
------------------------------------------------------------
2,300,000 Illinois Development Finance Authority, (Series 1993A)
Weekly VRDNs (Loyola Academy)/(Northern Trust Co., Chicago,
IL LOC) A-1+ 2,300,000
------------------------------------------------------------
19,000,000 Illinois Development Finance Authority, Var/Fixed Rate
Demand Revenue Bonds (Series 1994) Weekly VRDNs (Chicago
Symphony Orchestra Project)/(Northern Trust Co., Chicago, IL
and Sanwa Bank Ltd., Osaka LOCs) A-1+ 19,000,000
------------------------------------------------------------
29,000,000 Illinois Health Facilities Authority Weekly VRDNs (OSF
Health Care Systems) VMIG1 29,000,000
------------------------------------------------------------
6,500,000 Illinois Health Facilities Authority, (Series 1989A) Weekly
VRDNs (Methodist Health Services Corp.)/(Fuji Bank, Ltd.,
Tokyo LOC) A-1 6,500,000
------------------------------------------------------------
7,500,000 Illinois Health Facilities Authority, Variable Rate Demand
Revenue Bonds (Series 1994) Weekly VRDNs (South Suburban
Hospital)/(Harris Trust & Savings Bank, Chicago LOC) A-1+ 7,500,000
------------------------------------------------------------
2,760,000 Rockford, IL, EDRB, 4.95% TOBs (Independence Village of
Rockford)/(Banque Paribas, Paris LOC), Optional Tender
12/1/1995 A-1 2,760,000
------------------------------------------------------------ ------------
Total 67,060,000
------------------------------------------------------------ ------------
INDIANA--1.8%
------------------------------------------------------------
17,000,000 Indiana Bond Bank, Advance Funding Program Notes (Series
1995 A-3) VRNs, 1/10/1996 SP-1+ 17,000,000
------------------------------------------------------------ ------------
</TABLE>
6
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
IOWA--0.9%
------------------------------------------------------------
$ 6,310,000 Indianola, IA, Health Care Facility, Refunding Revenue Bonds
(Series 1992) Weekly VRDNs (The Village Project)/(Norwest
Bank Minnesota, Minneapolis LOC) A-1+ $ 6,310,000
------------------------------------------------------------
2,700,000 Iowa Higher Education Loan Authority, Revenue Bonds Weekly
VRDNs (MBIA INS)/(Dai-Ichi Kangyo Bank Ltd., Tokyo LIQ) VMIG1 2,700,000
------------------------------------------------------------ ------------
Total 9,010,000
------------------------------------------------------------ ------------
KENTUCKY--0.5%
------------------------------------------------------------
4,400,000 Kentucky Development Finance Authority Health Care System
Weekly VRDNs (Appalachian Regional Healthcare
System)/(Societe Generale, Paris LOC) VMIG1 4,400,000
------------------------------------------------------------ ------------
LOUISIANA--1.8%
------------------------------------------------------------
10,000,000 Louisiana PFA, Advance Funding Notes (Series 1994B), 4.60%
TANs (Orleans Parish, LA School Board), 8/31/1995 SP-1+ 10,009,592
------------------------------------------------------------
7,000,000 Louisiana PFA, Hospital Revenue, 4.40% CP (Our Lady of
Lake)/(FSA INS), Mandatory Tender 7/13/1995 A-1 7,000,000
------------------------------------------------------------ ------------
Total 17,009,592
------------------------------------------------------------ ------------
MARYLAND--3.8%
------------------------------------------------------------
1,700,000 Baltimore, MD, PCR Weekly VRDNs (SCM Plants, Inc.)/
(Barclays Bank PLC, London LOC) A-1+ 1,700,000
------------------------------------------------------------
18,000,000 Maryland Health & Higher Educational Facilities Authority,
Revenue Bonds (Series 1985A) Weekly VRDNs (Dai-Ichi Kangyo
Bank Ltd., Tokyo LOC) VMIG1 18,000,000
------------------------------------------------------------
6,000,000 Maryland State Department of Transportation,
6.20% BONDs, 8/15/1995 NR(2) 6,022,128
------------------------------------------------------------
3,000,000 Montgomery County, MD, EDA Weekly VRDNs (Howard Hughes
Medical Center) A-1+ 3,000,000
------------------------------------------------------------
2,915,000 Queen Annes County, MD, EDR, (Series 1994), 3.95% TOBs
(Safeway, Inc.)/(Bankers Trust Co., New York LOC), Optional
Tender 12/1/1995 A-1+ 2,915,000
------------------------------------------------------------
</TABLE>
7
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
MARYLAND--CONTINUED
------------------------------------------------------------
$ 2,915,000 Queen Annes County, MD, EDR, (Series 1994), 4.45% TOBs
(Safeway, Inc.)/(Bankers Trust Co., New York LOC), Optional
Tender 6/1/1995 A-1+ $ 2,915,000
------------------------------------------------------------
2,000,000 Washington Suburban Sanitary District, MD Weekly VRDNs
(Toronto-Dominion Bank LOC) A-1+ 2,000,000
------------------------------------------------------------ ------------
Total 36,552,128
------------------------------------------------------------ ------------
MASSACHUSETTS--0.3%
------------------------------------------------------------
2,500,000 Haverhill, MA, 8.875% BONDs (United States Treasury PRF),
12/1/1995 (@102) NR(1) 2,602,668
------------------------------------------------------------ ------------
MICHIGAN--5.3%
------------------------------------------------------------
3,000,000 Bruce Township, MI, HFA, Adjustable Rate Tender Securities
(ARTS) Weekly VRDNs (Sisters of Charity Health Care
System)/(MBIA INS)/(Morgan Guaranty Trust Co., New York LIQ) VMIG1 3,000,000
------------------------------------------------------------
3,000,000 Clinton Township, MI, EDA, Adjustable Rate Tender Securities
Weekly VRDNs (Sisters of Charity Health Care System)/(MBIA
INS)/(Morgan Guaranty Trust Co., New York LIQ) A-1+ 3,000,000
------------------------------------------------------------
500,000 Delta County, MI, Economy Development Corp., Environmental
Improvement Revenue Refunding Bonds (Series 1985 B), 3.85%
CP (Mead-Escanaba Paper Co. Project)/(Union Bank of
Switzerland, Zurich LOC), Mandatory Tender 7/12/1995 P-1 500,000
------------------------------------------------------------
14,600,000 Michigan State Hospital Finance Authority, (Series A) Weekly
VRDNs (OSF Health Care Systems) P-1 14,600,000
------------------------------------------------------------
3,000,000 Michigan State Housing Development Authority, Rental Housing
Revenue Bonds (1994 Series C) Weekly VRDNs (Credit Suisse,
Zurich LOC) A-1+ 3,000,000
------------------------------------------------------------
25,000,000 Michigan State, GO Notes, 5.00% TRANs, 9/29/1995 SP-1+ 25,066,984
------------------------------------------------------------
</TABLE>
8
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
MICHIGAN--CONTINUED
------------------------------------------------------------
$ 1,500,000 Sterling Heights, MI, Economy Development Corp., Adjustable
Rate Demand Limited Obligation Revenue Refunding Bonds
Weekly VRDNs (Sterling Shopping Center Associates
Project)/(NBD Bank, N.A., Detroit, MI LOC) A-1+ $ 1,500,000
------------------------------------------------------------ ------------
Total 50,666,984
------------------------------------------------------------ ------------
MINNESOTA--6.4%
------------------------------------------------------------
5,000,000 Becker, MN, PC (Series 1992A), 4.10% CP (Northern States
Power Co.), Mandatory Tender 6/15/1995 A-1+ 5,000,000
------------------------------------------------------------
5,500,000 Becker, MN, PC (Series 1992A), 4.20% CP (Northern States
Power Co.), Mandatory Tender 8/18/1995 A-1+ 5,500,000
------------------------------------------------------------
7,500,000 Bloomington, MN, Port Authority, Special Tax Revenue
Refunding Bonds (Series 1994B) Weekly VRDNs (Mall of
America)/(FSA INS)/(Credit Local de France LIQ) A-1+ 7,500,000
------------------------------------------------------------
4,600,000 Minnesota State Higher Education Coordinating Board,
Supplemental Student Loan Program Variable Rate Refunding
Revenue Bonds (Series 1994A) Weekly VRDNs (First Bank N.A.
LIQ) VMIG1 4,600,000
------------------------------------------------------------
3,480,000 (a) Minnesota State, P-Floats Weekly VRDNs (Merrill Lynch
Capital Services, Inc. LIQ) VMIG1 3,480,000
------------------------------------------------------------
13,905,000 Olmsted County, MN, COP Building Authority Weekly VRDNs
(Human Services Infrastructure)/(Sanwa Bank Ltd., Osaka LOC) A-1+ 13,905,000
------------------------------------------------------------
10,000,000 Rochester, MN, Health Care Facility Authority Weekly VRDNs
(Mayo Foundation) VMIG1 10,000,000
------------------------------------------------------------
4,000,000 Rochester, MN, Health Care Facility Authority Weekly VRDNs
(Mayo Foundation) VMIG1 4,000,000
------------------------------------------------------------
990,000 St. Louis Park Hennepin County, MN Weekly VRDNs A-1+ 990,000
------------------------------------------------------------
875,000 St. Louis Park Hennepin County, MN, (Series A) Weekly VRDNs A-1+ 875,000
------------------------------------------------------------
</TABLE>
9
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
MINNESOTA--CONTINUED
------------------------------------------------------------
$ 5,000,000 University of Minnesota, (Series G), 4.50% TOBs (Regents of
University of Minnesota), Optional Tender 8/1/1995 A-1+ $ 5,000,000
------------------------------------------------------------ ------------
Total 60,850,000
------------------------------------------------------------ ------------
MISSOURI--0.7%
------------------------------------------------------------
6,400,000 Missouri State Environmental Improvement & Energy Authority,
(Series 1993M) Weekly VRDNs (Associated Electric
Cooperative, Inc.)/(NRUCFC GTD) A-1 6,400,000
------------------------------------------------------------ ------------
MONTANA--1.5%
------------------------------------------------------------
4,900,000 Forsyth, Rosebud County, MT, PCR, 4.20% CP
(Pacificorp)/(Industrial Bank of Japan Ltd., Tokyo LOC),
Mandatory Tender 7/19/1995 A-1 4,900,000
------------------------------------------------------------
9,700,000 Forsyth, Rosebud County, MT, PCR, 4.25% CP
(Pacificorp)/(Industrial Bank of Japan Ltd., Tokyo LOC),
Mandatory Tender 7/20/1995 A-1 9,700,000
------------------------------------------------------------ ------------
Total 14,600,000
------------------------------------------------------------ ------------
NEW MEXICO--1.2%
------------------------------------------------------------
11,700,000 Albuquerque, NM, Municipal Gross Receipt Tax Revenue Weekly
VRDNs (Sanwa Bank Ltd., Osaka LOC) MIG1 11,700,000
------------------------------------------------------------ ------------
NEW YORK--2.6%
------------------------------------------------------------
10,000,000 New York City, NY, (Series B) Monthly VRDNs SP-1 10,000,000
------------------------------------------------------------
15,000,000 Suffolk County, NY, 1995 (RA Series I), 5.25% TANs
(Westdeutsche Landesbank Girozentrale LOC), 8/15/1995 SP-1+ 15,013,510
------------------------------------------------------------ ------------
Total 25,013,510
------------------------------------------------------------ ------------
NORTH CAROLINA--6.8%
------------------------------------------------------------
20,000,000 Martin County, NC, IFA, (Series 1993) Weekly VRDNs
(Weyerhaeuser Co.) A-1 20,000,000
------------------------------------------------------------
</TABLE>
10
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
NORTH CAROLINA--CONTINUED
------------------------------------------------------------
$30,540,000 NCNB Pooled Tax-Exempt Trust, (Series 1990A) Weekly VRDNs
(NCNB Tax Exempt Trust 1990A)/(Nationsbank of North Carolina
N.A. LOC) P-1 $ 30,540,000
------------------------------------------------------------
2,500,000 North Carolina Educational Facilities Finance Agency,
(Series 1990) Weekly VRDNs (Bowman Gray School of
Medicine)/(Wachovia Bank of NC, NA, Winston-Salem LOC) VMIG1 2,500,000
------------------------------------------------------------
3,515,000 North Carolina Medical Care Commission Hospital, Revenue
Bonds (Series 1986AZ) Weekly VRDNs (MBIA INS)/(Banque
Paribas, Paris LIQ) VMIG1 3,515,000
------------------------------------------------------------
2,000,000 North Carolina Medical Care Commission Hospital, Revenue
Bonds (Series 1993) Weekly VRDNs (Moses H. Cone Memorial ) A-1+ 2,000,000
------------------------------------------------------------
5,910,000 (a) University of North Carolina at Chapel Hill, Utilities
System Revenue Bonds P-Floats (Series 1993) Weekly VRDNs
(Merrill Lynch Capital Services, Inc. LIQ) VMIG1 5,910,000
------------------------------------------------------------ ------------
Total 64,465,000
------------------------------------------------------------ ------------
OHIO--3.9%
------------------------------------------------------------
800,000 Akron, OH, Sanitary Sewer System Revenue Bonds Weekly VRDNs
(Credit Suisse, Zurich LOC) A-1+ 800,000
------------------------------------------------------------
9,585,000 Cleveland, OH, City School District, Energy Conservation
Improvement Bonds (Series 1994) Weekly VRDNs (Internationale
Nederlanden Bank N.V. LIQ)/ (Internationale Nederlanden Bank
N.V. LOC) A-1+ 9,585,000
------------------------------------------------------------
4,000,000 Cleveland-Cuyahoga County, OH, Port Authority,
(Series 1993) Weekly VRDNs (Rock & Roll Hall of Fame
Museum)/(Credit Local de France LOC) A-1+ 4,000,000
------------------------------------------------------------
</TABLE>
11
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
OHIO--CONTINUED
------------------------------------------------------------
$ 3,955,000 Franklin County, OH, Hospital Facility Authority,
(Series 1992) Weekly VRDNs (Wesley Glenn, Inc.)/(Fifth Third
Bancorp LOC) VMIG1 $ 3,955,000
------------------------------------------------------------
3,670,000 Marion County, OH, Hospital Authority, (Series 1991), 4.25%
TOBs (Marion County, OH Pooled Hospital Program)/(Bank One,
Columbus, N.A. LOC), Optional Tender 11/1/1995 A-1+ 3,670,000
------------------------------------------------------------
1,000,000 Ohio State Air Quality Development Authority Weekly VRDNs
(Timken Co.)/(Credit Suisse, Zurich LOC) A-1+ 1,000,000
------------------------------------------------------------
5,115,000 Ohio State Public Facilities Commission, Higher Education
Capital Facilities (Series II-A), 4.60% BONDs (AMBAC INS),
6/1/1995 NR(1) 5,115,000
------------------------------------------------------------
2,500,000 Ohio State Water Development Authority, Multimodal Water
Development (Series 1993) Weekly VRDNs (Timken
Co.)/(Wachovia Bank of Georgia NA, Atlanta LOC) A-1+ 2,500,000
------------------------------------------------------------
6,300,000 Toledo, OH, City Services Special Assessment Notes (Services
1995), 5.25% TRANs (Mitsubishi Bank Ltd., Tokyo LOC),
5/2/1996 MIG1 6,347,092
------------------------------------------------------------ ------------
Total 36,972,092
------------------------------------------------------------ ------------
OKLAHOMA--3.7%
------------------------------------------------------------
2,840,000 Muskogee, OK, Industrial Trust, (Series 1985) Weekly VRDNs
(Muskogee Mall Limited Partnership)/ (Boatmen's National
Bank of St. Louis LOC) VMIG1 2,840,000
------------------------------------------------------------
4,010,000 Muskogee, OK, Industrial Trust, (Series 1985) Weekly VRDNs
(Warmack Muskogee Limited Partnership)/ (Boatmen's National
Bank of St. Louis LOC) VMIG1 4,010,000
------------------------------------------------------------
15,000,000 Oklahoma Industries Authority, Health System Revenue Bonds
(Series 1995C), 4.10% CP (Baptist Medical Center, OK),
Mandatory Tender 10/18/1995 A-1 15,000,000
------------------------------------------------------------
</TABLE>
12
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
OKLAHOMA--CONTINUED
------------------------------------------------------------
$13,000,000 Oklahoma Industries Authority, Health System Revenue Bonds
(Series 1995C), 4.25% CP (Baptist Medical Center, OK),
Mandatory Tender 7/21/1995 A-1 $ 13,000,000
------------------------------------------------------------ ------------
Total 34,850,000
------------------------------------------------------------ ------------
PENNSYLVANIA--5.9%
------------------------------------------------------------
5,000,000 Beaver County, PA, IDA, Pollution Control Revenue Refunding
Bonds (1994 Series), 4.50% CP (Duquesne Light Power
Co.)/(Swiss Bank Corp., New York, NY LOC), Mandatory Tender
10/10/1995 A-1+ 5,000,000
------------------------------------------------------------
20,000,000 Commonwealth of Pennsylvania, Tax Anticipation Notes (First
Series of Series 1994-1995), 4.75% TANs, 6/30/1995 SP-1+ 20,011,577
------------------------------------------------------------
5,000,000 Delaware County, PA, PCR, (Series C), 4.00% CP (Philadelphia
Electric Co.)/(FGIC INS), Mandatory Tender 10/6/1995 A-1+ 5,000,000
------------------------------------------------------------
6,000,000 Delaware County, PA, PCR, (Series C), 4.30% CP (Philadelphia
Electric Co.)/(FGIC INS), Mandatory Tender 6/16/1995 A-1+ 6,000,000
------------------------------------------------------------
700,000 Erie County, PA, Hospital Authority Weekly VRDNs
(St. Vincent Health System)/(Fuji Bank, Ltd., Tokyo LOC) A-1 700,000
------------------------------------------------------------
5,000,000 Philadelphia, PA, (Series A), 4.75% TRANs (Canadian Imperial
Bank of Commerce, Toronto LOC), 6/15/1995 SP-1+ 5,001,384
------------------------------------------------------------
6,470,000 Pittsburgh, PA, Public Parking Authority, Parking Revenue
Bonds, 9.50% BONDs (United States Treasury PRF), 12/1/1995
(@102) NR(1) 6,762,895
------------------------------------------------------------
5,500,000 University of Cincinnati, OH, (Series N), 5.00% BANs,
3/21/1996 SP-1+ 5,514,748
------------------------------------------------------------
2,400,000 Washington County, PA, Municipal Authority Facilities Weekly
VRDNs (Eye & Ear Hospital)/(PNC Bank, N.A. LOC) P-1 2,400,000
------------------------------------------------------------ ------------
Total 56,390,604
------------------------------------------------------------ ------------
</TABLE>
13
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
SOUTH CAROLINA--4.1%
------------------------------------------------------------
$29,500,000 Greenville, SC, Hospital System Board of Trustees,
(Series 1993B) Weekly VRDNs (Greenville County, SC, Hospital
Authority) A-1+ $ 29,500,000
------------------------------------------------------------
9,830,000 York County, SC, PCR, (Series 1984N), 4.30% TOBs (North
Carolina Electric Membership Corp.)/(NRUCFC GTD), Optional
Tender 9/15/1995 A-1 9,830,000
------------------------------------------------------------ ------------
Total 39,330,000
------------------------------------------------------------ ------------
TENNESSEE--4.1%
------------------------------------------------------------
15,000,000 Chattanooga, TN, HEFA Weekly VRDNs (Mccallie School)/(Trust
Company Bank, Atlanta LOC) A-1+ 15,000,000
------------------------------------------------------------
14,000,000 Chattanooga, TN, HEFA Weekly VRDNs (Sisken
Hospital)/(Sumitomo Bank Ltd., Osaka LOC) P-1 14,000,000
------------------------------------------------------------
2,415,000 Metropolitan Government Nashville & Davidson Counties, TN,
HEFA, (Series 1985B), 4.35% TOBs (Vanderbilt University),
Optional Tender 5/1/1996 A-1+ 2,415,000
------------------------------------------------------------
7,905,000 Shelby County, TN, Health Education & Housing Facility,
4.20% TOBs (Methodist Health System, Inc.)/ (MBIA INS),
Optional Tender 8/1/1995 A-1+ 7,905,000
------------------------------------------------------------ ------------
Total 39,320,000
------------------------------------------------------------ ------------
TEXAS--6.9%
------------------------------------------------------------
4,600,000 Dallas, TX, (Series C), 3.60% TOBs, Mandatory Tender
6/15/1995 A-1+ 4,600,000
------------------------------------------------------------
4,875,000 Grapevine, TX, IDC Airport Improvement, (Series 1983A),
4.75% TOBs (Singer Company)/(Bank of Montreal LOC), Optional
Tender 4/1/1996 P-1 4,875,000
------------------------------------------------------------
7,900,000 Harris County, TX, HFDC Weekly VRDNs (Memorial Senior
Services, Inc.)/(Societe Generale, Paris LOC) VMIG1 7,900,000
------------------------------------------------------------
7,300,000 Harris County, TX, HFDC, (Series 1994) Daily VRDNs
(Methodist Hospital, Houston, TX) A-1+ 7,300,000
------------------------------------------------------------
4,800,000 Harris County, TX, HFDC, (Series B) Daily VRDNs
(St. Luke's Episcopal Hospital) A-1+ 4,800,000
------------------------------------------------------------
</TABLE>
14
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
TEXAS--CONTINUED
------------------------------------------------------------
$ 7,100,000 Harris County, TX, Toll Road Unlimited Tax & Sub Lien
Revenue (Series 1994-G) Weekly VRDNs A-1+ $ 7,100,000
------------------------------------------------------------
6,900,000 Harris County, TX, Toll Road Unlimited Tax & Sub Lien
Revenue (Series 1994-H) Weekly VRDNs A-1+ 6,900,000
------------------------------------------------------------
5,000,000 Sulfur Springs, TX, IDA Weekly VRDNs (HON Industries,
Inc.)/(Credit Suisse, Zurich LOC) A-1+ 5,000,000
------------------------------------------------------------
1,000,000 Texas State Public Finance Authority, (Series 1993A), 4.20%
CP, Mandatory Tender 7/18/1995 A-1+ 1,000,000
------------------------------------------------------------
6,300,000 Texas State Public Finance Authority, (Series 1993A), 4.50%
CP, Mandatory Tender 7/18/1995 A-1+ 6,300,000
------------------------------------------------------------
10,000,000 Texas State, 5.00% TRANs, 8/31/1995 SP-1+ 10,022,617
------------------------------------------------------------ ------------
Total 65,797,617
------------------------------------------------------------ ------------
UTAH--1.7%
------------------------------------------------------------
6,000,000 Emery County, UT, Pollution Control Revenue Refunding Bonds
(Series 1994) Daily VRDNs (Pacificorp)/(AMBAC INS)/(Bank of
Nova Scotia, Toronto LIQ) A-1+ 6,000,000
------------------------------------------------------------
10,400,000 Intermountain Power Agency, UT, (Series F), 3.60% TOBs,
Mandatory Tender 6/15/1995 A-1 10,400,000
------------------------------------------------------------ ------------
Total 16,400,000
------------------------------------------------------------ ------------
VERMONT--0.8%
------------------------------------------------------------
8,000,000 Vermont IDA Weekly VRDNs (Wallace Computer, Inc.)/ (Wachovia
Bank of NC, NA, Winston-Salem LOC) A-1 8,000,000
------------------------------------------------------------ ------------
VIRGINIA--0.5%
------------------------------------------------------------
5,000,000 Virginia State Housing Development Authority, (Series
1993A), 4.25% TOBs, Mandatory Tender 7/12/1995 A-1+ 5,000,000
------------------------------------------------------------ ------------
</TABLE>
15
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
WEST VIRGINIA--1.4%
------------------------------------------------------------
$ 8,000,000 Cabell County Commission, WV, Life Care Facilities
Multi-Option Adjustable Rate Revenue Bonds (Series 1995)
Weekly VRDNs (Foster Foundation)/(Huntington National Bank,
Columbus, OH LOC) A-1 $ 8,000,000
------------------------------------------------------------
5,100,000 West Virginia University Board of Regents, 5.35% TOBs
(Morgan Guaranty Trust Co., New York LOC), Optional Tender
2/1/1996 A-1+ 5,100,000
------------------------------------------------------------ ------------
Total 13,100,000
------------------------------------------------------------ ------------
WISCONSIN--1.5%
------------------------------------------------------------
8,000,000 Wisconsin HEFA, Variable Rate Demand Revenue Bonds (Series
1994) Weekly VRDNs (Felician Health Care, Inc.
Project)/(Lasalle National Bank, Chicago LOC) A-1+ 8,000,000
------------------------------------------------------------
6,000,000 Wisconsin HEFA Weekly VRDNs (St. Luke's Medical
Center)/(Sumitomo Bank Ltd., Osaka LOC) VMIG1 6,000,000
------------------------------------------------------------ ------------
Total 14,000,000
------------------------------------------------------------ ------------
WYOMING--1.9%
------------------------------------------------------------
5,125,000 Lincoln County, WY, PCR, 4.40% TOBs (Amoco Corp.), Optional
Tender 10/1/1995 A-1+ 5,125,000
------------------------------------------------------------
6,295,000 Wyoming Community Development Authority, (Series 1986C),
4.30% TOBs (First National Bank of Chicago LIQ), Optional
Tender 12/1/1995 NR(2) 6,295,000
------------------------------------------------------------
6,390,000 Wyoming Community Development Authority, (Series 1986C),
4.30% TOBs (First National Bank of Chicago LIQ), Optional
Tender 6/1/1995 NR(2) 6,390,000
------------------------------------------------------------ ------------
Total 17,810,000
------------------------------------------------------------ ------------
OTHER--3.0%
------------------------------------------------------------
15,000,000 (a) Clipper Tax Exempt Trust, (Series 1993-1) Weekly VRDNs
(State Street Bank and Trust Co. LIQ) A-1+ 15,000,000
------------------------------------------------------------
6,786,764 (a) LaSalle National Bank Leasetops Trust, (Series 1994B) Weekly
VRDNs (LaSalle National Bank, Chicago LIQ)/ (Lasalle
National Bank, Chicago LOC) A-1+ 6,786,764
------------------------------------------------------------
</TABLE>
16
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
PRINCIPAL AMOUNT RATING* VALUE
- ---------------- ------------------------------------------------------------ ------ ------------
<C> <S> <C> <C>
SHORT-TERM MUNICIPAL SECURITIES--CONTINUED
- -------------------------------------------------------------------------------
OTHER--CONTINUED
------------------------------------------------------------
$ 6,744,216 (a) LaSalle National Bank Tax-Exempt Grantor, (Series 1993A)
Weekly VRDNs (LaSalle National Bank, Chicago LIQ)/(Lasalle
National Bank, Chicago LOC) A-1+ $ 6,744,216
------------------------------------------------------------ ------------
Total 28,530,980
------------------------------------------------------------ ------------
TOTAL INVESTMENTS (AT AMORTIZED COST) (b) $959,192,510
------------------------------------------------------------ ------------
------------
<FN>
(a) Denotes a restricted security which is subject to restrictions on resale
under Federal Securities laws. These securities have been determined to be
liquid under criteria established by the Board of Trustees. At the end of
the period, these securities amounted to 47,840,980 which represents 5.0%
of net assets.
(b) Also represents cost for federal tax purposes.
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings.
Note: The categories of investments are shown as a percentage of net assets
($954,728,584) at May 31, 1995.
</TABLE>
17
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
AMBAC --American Municipal Bond Assurance Corporation
BANs --Bond Anticipation Notes
COP --Certificates of Participation
CP --Commercial Paper
EDA --Economic Development Authority
EDR --Economic Development Revenue
EDRB --Economic Development Revenue Bonds
FGIC --Financial Guaranty Insurance Company
FSA --Financial Security Assurance
GO --General Obligation
HEFA --Health and Education Facilities Authority
HFA --Housing Finance Authority
HFDC --Health Facility Development Corporation
IDA --Industrial Development Authority
IDC --Industrial Development Corporation
IDR --Industrial Development Revenue
IFA --Industrial Finance Authority
LIQ --Liquidity Agreement
LOC --Letter of Credit
LOCs --Letter(s) of Credit
MBIA --Municipal Bond Investors Assurance
NRUCFC --National Rural Utilities Cooperative Finance Corporation
PCR --Pollution Control Revenue
PC --Participation Certificate
PFA --Public Facility Authority
PLC --Public Limited Company
PRF --Prerefunded
TANs --Tax Anticipation Notes
TOBs --Tender Option Bonds
TRANs --Tax and Revenue Anticipation Notes
UT --Unlimited Tax
VRDNs --Variable Rate Demand Notes
VRNs --Variable Rate Notes
</TABLE>
(See Notes which are an integral part of the Financial Statements)
18
FEDERATED TAX-FREE TRUST
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------
Investments in securities, at amortized cost and
value $959,192,510
- ------------------------------------------------------------------
Cash 744,951
- ------------------------------------------------------------------
Income receivable 9,822,450
- ------------------------------------------------------------------
Receivable for shares sold 3,292
- ------------------------------------------------------------------ ------------
Total assets 969,763,203
- ------------------------------------------------------------------
LIABILITIES:
- ------------------------------------------------------------------
Payable for investments purchased $11,710,000
- -----------------------------------------------------
Payable for shares redeemed 188,081
- -----------------------------------------------------
Income distribution payable 3,067,591
- -----------------------------------------------------
Accrued expenses 68,947
- ----------------------------------------------------- -----------
Total liabilities 15,034,619
- ------------------------------------------------------------------ ------------
NET ASSETS for 954,759,804 shares outstanding $954,728,584
- ------------------------------------------------------------------ ------------
------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------
Paid in capital $954,759,804
- ------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (31,220)
- ------------------------------------------------------------------ ------------
Total Net Assets $954,728,584
- ------------------------------------------------------------------ ------------
------------
NET ASSET VALUE, Offering Price and Redemption
Proceeds Per Share:
($954,728,584 DIVIDED BY 954,759,804 shares
outstanding) $ 1.00
- ------------------------------------------------------------------ ------------
------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
19
FEDERATED TAX-FREE TRUST
STATEMENT OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------
Interest $23,128,709
- -----------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------
Investment advisory fee $2,299,053
- -----------------------------------------------------------------
Administrative personnel and services fee 435,096
- -----------------------------------------------------------------
Custodian fees 103,685
- -----------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 18,299
- -----------------------------------------------------------------
Directors'/Trustees' fees 10,708
- -----------------------------------------------------------------
Auditing fees 16,367
- -----------------------------------------------------------------
Legal fees 9,622
- -----------------------------------------------------------------
Portfolio accounting fees 58,832
- -----------------------------------------------------------------
Shareholder services fee 287,382
- -----------------------------------------------------------------
Share registration costs 3,544
- -----------------------------------------------------------------
Printing and postage 5,823
- -----------------------------------------------------------------
Insurance premiums 11,750
- -----------------------------------------------------------------
Taxes 1,586
- -----------------------------------------------------------------
Miscellaneous 7,256
- ----------------------------------------------------------------- ----------
Total expenses 3,269,003
- -----------------------------------------------------------------
Deduct--Waiver of investment advisory fee 677,139
- ----------------------------------------------------------------- ----------
Net expenses 2,591,864
- ----------------------------------------------------------------------------- -----------
Net investment income 20,536,845
- -----------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -----------------------------------------------------------------------------
Net realized gain (loss) on investments (11,520)
- ----------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $20,525,325
- ----------------------------------------------------------------------------- -----------
-----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
20
FEDERATED TAX-FREE TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 31, 1995 YEAR ENDED
(UNAUDITED) NOVEMBER 30, 1994
---------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------
Net investment income $ 20,536,845 $ 30,872,573
- -------------------------------------------------------------
Net realized gain/loss on investments ($11,520 net loss and
$11,840 net loss, respectively, as computed for federal tax
purposes) (11,520) (11,840)
- ------------------------------------------------------------- ---------------- -----------------
Change in assets resulting from operations 20,525,325 30,860,733
- ------------------------------------------------------------- ---------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------
Distributions from net investment income (20,536,845) (30,872,573)
- ------------------------------------------------------------- ---------------- -----------------
SHARE TRANSACTIONS
- -------------------------------------------------------------
Proceeds from sale of Shares 1,927,256,504 4,662,199,876
- -------------------------------------------------------------
Net asset value of Shares issued to shareholders in payment
of distributions declared 1,449,691 2,966,874
- -------------------------------------------------------------
Cost of Shares redeemed (2,189,513,563) (4,796,398,508)
- ------------------------------------------------------------- ---------------- -----------------
Change in net assets resulting from share transactions (260,807,368) (131,231,758)
- ------------------------------------------------------------- ---------------- -----------------
Change in net assets (260,818,888) (131,243,598)
- ------------------------------------------------------------- ---------------- -----------------
NET ASSETS:
- -------------------------------------------------------------
Beginning of period 1,215,547,472 1,346,791,070
- ------------------------------------------------------------- ---------------- -----------------
End of period $ 954,728,584 $ 1,215,547,472
- ------------------------------------------------------------- ---------------- -----------------
---------------- -----------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
21
FEDERATED TAX-FREE TRUST
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED NOVEMBER 30,
SIX MONTHS
ENDED ---------------------------------------------------------------------------
MAY 31, 1995
(UNAUDITED) 1994 1993 1992 1991 1990 1989
- ------------------------------ ------------ ---------- ---------- ---------- ---------- ---------- ----------
<S> <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
- ------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ------------------------------
Net investment income 0.02 0.02 0.02 0.03 0.04 0.06 0.06
- ------------------------------
LESS DISTRIBUTIONS
- ------------------------------
Distributions from net
investment income (0.02) (0.02) (0.02) (0.03) (0.04) (0.06) (0.06)
- ------------------------------ ------ ---------- ---------- ---------- ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------ ------ ---------- ---------- ---------- ---------- ---------- ----------
------ ---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN (a) 1.81% 2.43% 2.18% 2.88% 4.49% 5.68% 6.03%
- ------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------
Expenses 0.45%(b) 0.45% 0.46% 0.46% 0.46% 0.45% 0.45%
- ------------------------------
Net investment income 3.57%(b) 2.38% 2.16% 2.84% 4.40% 5.54% 5.86%
- ------------------------------
Expense waiver/reimbursement
(c) 0.12%(b) 0.10% 0.03% 0.00% 0.00% 0.00% 0.00%
- ------------------------------
SUPPLEMENTAL DATA
- ------------------------------
Net assets, end of period
(000 omitted) $954,729 $1,215,547 $1,346,791 $1,523,588 $1,720,730 $1,887,467 $2,140,368
- ------------------------------
<CAPTION>
YEAR ENDED NOVEMBER 30,
------------------------------------
1988 1987 1986
- ------------------------------ ---------- ---------- ----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 1.00 $ 1.00 $ 1.00
- ------------------------------
INCOME FROM INVESTMENT
OPERATIONS
- ------------------------------
Net investment income 0.05 0.04 0.04
- ------------------------------
LESS DISTRIBUTIONS
- ------------------------------
Distributions from net
investment income (0.05) (0.04) (0.04)
- ------------------------------ ---------- ---------- ----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00
- ------------------------------ ---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN (a) 4.87% 4.11% 4.43%
- ------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------
Expenses 0.45% 0.44% 0.45%
- ------------------------------
Net investment income 4.74% 4.01% 4.31%
- ------------------------------
Expense waiver/reimbursement
(c) 0.00% 0.01% 0.00%
- ------------------------------
SUPPLEMENTAL DATA
- ------------------------------
Net assets, end of period
(000 omitted) $2,618,595 $2,997,042 $4,119,247
- ------------------------------
<FN>
(a) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(b) Computed on an annualized basis.
(c) This expense decrease is reflected in both the expense and net investment
income ratios shown above.
</TABLE>
(See Notes which are an integral part of the Financial Statements)
22
FEDERATED TAX-FREE TRUST
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1995 (UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Federated Tax-Free Trust (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act"), as a diversified, open-end,
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.
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.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code").
Distributions to shareholders are recorded on the ex-dividend date.
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 income. Accordingly, no
provisions for federal tax are necessary.
At May 31, 1995, the Trust, for federal tax purposes, had a capital loss
carryforward of $19,699, 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 ($7,859) and 2002 ($11,840).
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Trust may engage in
when-issued or delayed delivery transactions. The 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.
RESTRICTED SECURITIES--Restricted securities are securities that may only be
resold upon registration under federal securities laws or in transactions
exempt from such registration. Many restricted securities may be resold in
the secondary market in transactions exempt from registration. In some
cases, the restricted securities may be resold without registration upon
exercise of a demand feature. Such restricted securities may be determined
to be liquid under criteria established by the Board of Trustees (the
"Trustees") The Trust will not incur any registration costs upon such
resales. Restricted securities are valued at amortized cost in
23
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
accordance with Rule 2a-7 under the Act. Additional information on each
restricted security held at May 31, 1995, is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
- ------------------------------------------------------------------ ----------- -----------
<S> <C> <C>
Clipper, CA, Tax-Exempt Trust (94-2) Weekly VRDNs (State
Street Bank & Trust Co. BPA)/(Various LOCs) 10/21/94 10,000,000
- ------------------------------------------------------------------
Minnesota State Weekly VRDNs P-Floats (Merrill Lynch Capital
Services BPA) 6/2/93 3,400,000
- ------------------------------------------------------------------
University of North Carolina at Chapel Hill Utilities System
Revenue Bonds Weekly VRDNs P-Floats (Series 1993)/(Merrill
Lynch Capital Services BPA) 6/2/93 5,910,000
- ------------------------------------------------------------------
Clipper Tax Exempt Trust, Weekly VRDNs (Series 1993-1)/(State
Street Bank & Trust Co. BPA) 9/27/93 15,000,000
- ------------------------------------------------------------------
LaSalle National Bank Tax Exempt Grantor Weekly VRDNs (Series
1993A)/(LaSalle National Bank BPA) 3/17/93 6,786,764
- ------------------------------------------------------------------
LaSalle National Bank LeaseTops Trust Weekly VRDNs (Series
1994B)/(LaSalle National Bank BPA) 6/15/94 6,744,216
- ------------------------------------------------------------------
</TABLE>
OTHER--Investment transactions are accounted for on the trade date.
(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). At May
31, 1995, capital paid-in aggregated $954,759,804. Transactions in shares were
as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
MAY 31, 1995 NOVEMBER 30, 1994
- -------------------------------------------------- ---------------- -----------------
<S> <C> <C>
Shares sold 1,927,256,504 4,662,199,876
- --------------------------------------------------
Shares issued to shareholders in payment of
distributions declared 1,449,691 2,966,874
- --------------------------------------------------
Shares redeemed (2,189,513,563) (4,796,398,508)
- -------------------------------------------------- ---------------- -----------------
Net change resulting from share transactions (260,807,368) (131,231,758)
- -------------------------------------------------- ---------------- -----------------
---------------- -----------------
</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 0.40 of 1% of the Trust's average daily net assets. The 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,
24
FEDERATED TAX-FREE TRUST
- ---------------------------------------------------------
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 0.45 of 1% of average daily net assets of
the Trust.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Trust with administrative
personnel and services. 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 the period
of the Administrative Services Agreement 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 daily net assets of the Trust for the period.
This fee is to obtain certain services for shareholders and to maintain
shareholder accounts.
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated
Services Company ("FServ") serves as transfer and dividend disbursing agent
for the Trust. This fee is based on the size, type, and number of accounts
and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ also maintains the Trust's accounting
records for which it receives a fee. The fee is based on the level of the
Trust's average daily net assets for the period, plus out-of-pocket
expenses.
INTERFUND TRANSACTIONS--During the year ended May 31, 1995, the Trust
engaged in purchase and sale transactions with funds that have a common
investment adviser (or affiliated investment advisers), common
Directors/Trustees, and/or common Officers. These transactions were made at
current market value pursuant to Rule 17a-7 under the Act amounting to
$986,280,000 and $896,445,000, respectively.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
25
<TABLE>
<CAPTION>
TRUSTEES OFFICERS
- ---------------------------------------------------------
<S> <C>
John F. Donahue John F. Donahue
Thomas G. Bigley 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
Peter E. Madden VICE PRESIDENT AND TREASURER
Gregor F. Meyer John W. McGonigle
John E. Murray, Jr. VICE PRESIDENT AND SECRETARY
Wesley W. Posvar David M. Taylor
Marjorie P. Smuts ASSISTANT TREASURER
S. Elliott Cohan
ASSISTANT SECRETARY
</TABLE>
Mutual funds are not bank deposits or obligations, are not
guaranteed by any bank, and are not insured or guaranteed by the
U.S. government, the Federal Deposit Insurance Corporation, the
Federal Reserve Board, or any other government agency. Investment
in mutual funds involves investment risk, including possible loss
of principal.
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.
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FEDERATED
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TAX-FREE
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TRUST
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SEMI-ANNUAL REPORT
TO SHAREHOLDERS
MAY 31, 1995
[LOGO] FEDERATED SECURITIES CORP.
Distributor
A subsidiary of FEDERATED
INVESTORS
FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779
CUSIP 314282104
8070103 (7/95) --------------------------------------
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