-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KAJ1YSDPizKWInar0AT7wJbel1NB7wmLqBT9S81rlv9Yr8cgRV6ffkvMKy44DVdM qe3mRXtxjMKsncteRk3D9Q== 0000950123-08-002738.txt : 20080310 0000950123-08-002738.hdr.sgml : 20080310 20080310113425 ACCESSION NUMBER: 0000950123-08-002738 CONFORMED SUBMISSION TYPE: N-CSRS PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20071231 FILED AS OF DATE: 20080310 DATE AS OF CHANGE: 20080310 EFFECTIVENESS DATE: 20080310 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ACTIVE ASSETS TAX FREE TRUST CENTRAL INDEX KEY: 0000351881 IRS NUMBER: 133075002 STATE OF INCORPORATION: MA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-CSRS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03162 FILM NUMBER: 08676611 BUSINESS ADDRESS: STREET 1: 522 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10036 BUSINESS PHONE: 800-869-6397 MAIL ADDRESS: STREET 1: 522 FIFTH AVENUE CITY: NEW YORK STATE: NY ZIP: 10036 0000351881 S000004051 ACTIVE ASSETS TAX FREE TRUST C000011337 ACTIVE ASSETS TAX FREE TRUST aatxx N-CSRS 1 y46376nvcsrs.txt FORM N-CSR UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number: 811-03162 Active Assets Tax-Free Trust (Exact name of registrant as specified in charter) 522 Fifth Avenue, New York, New York 10036 (Address of principal executive offices) (Zip code) Ronald E. Robison 522 Fifth Avenue, New York, New York 10036 (Name and address of agent for service) Registrant's telephone number, including area code: 212-296-6990 Date of fiscal year end: June 30, 2008 Date of reporting period: December 31, 2007 Item 1 - Report to Shareholders Welcome, Shareholder: In this report, you'll learn about how your investment in Active Assets Tax-Free Trust performed during the semiannual period. We will provide an overview of the market conditions, and discuss some of the factors that affected performance during the reporting period. In addition, this report includes the Fund's financial statements and a list of Fund investments. THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE FUND BEING OFFERED. MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO PASS. THERE IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS INVESTMENT OBJECTIVE. AN INVESTMENT IN A MONEY MARKET FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF AN INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. PLEASE SEE THE PROSPECTUS FOR MORE COMPLETE INFORMATION ON INVESTMENT RISKS. FUND REPORT For the six months ended December 31, 2007 MARKET CONDITIONS The latter half of 2007 was marked by market turmoil and uncertainty. The dislocations stemming from subprime mortgage woes permeated all sectors of the fixed income markets, leading to a significant contraction in credit and liquidity. Growing losses and mark-to-market writedowns announced by major financial institutions had a crippling effect on the transaction of business. The monoline bond insurers - insurance companies that provide guarantees to issuers that enhance their credit and which have played a significant role in the municipal bond market in recent years - were also caught up in the crisis. Furthermore, state and local governments began to feel the effects of the slowing housing market as incoming tax receipts lagged behind projections. At the same time, signs began to emerge in the fourth quarter of the year that the problems in the markets were beginning to slow economic growth. In an effort to spur the economy and ease the liquidity crunch, the Federal Open Market Committee (the "Fed") lowered the target federal funds rate a total of one percent in three separate moves between September and year end, bringing the rate to 4.25 percent. The troubling events had an impact on tax-exempt money market interest rates as well. Dealers became reluctant to carry large inventories and in an effort to appeal to non-traditional investors, kept rates for variable-rate instruments at attractive levels compared to taxable alternatives. As a result, the Securities Industry and Financial Markets Association (SIFMA) Index of weekly municipal variable-rate yields dropped only 31 basis points from 3.73 percent to 3.42 percent during the second half of the year, which did not fully reflect the 100 basis point cut in the federal funds rate target. At the same time, tax-free money market funds experienced steady cash inflows. The result was an odd combination of relatively high municipal money market rates amid tight supply conditions. PERFORMANCE ANALYSIS As of December 31, 2007, Active Assets Tax-Free Trust had net assets of approximately $8.5 billion and an average portfolio maturity of 25 days. For the six-month period ended December 31, 2007, the Fund provided a total return of 1.62 percent. For the seven-day period ended December 31, 2007, the Fund provided an effective annualized yield of 3.04 percent and a current yield of 3.00 percent, while its 30-day moving average yield for December was 2.94 percent. Past performance is no guarantee of future results. Given the unsettling events and uncertain market conditions during the reporting period, daily and weekly variable-rate securities remained the dominant investments in the Fund's portfolio. In the latter months of the period, however, prospects for declining short-term interest rates led us to seek opportunities to lock in attractive yields through investments in longer-term fixed-rate instruments. We selectively added to holdings in notes in the six-to- 12 month range and commercial paper in the 30-to-90 day range. A light financing calendar, however, limited opportunities to extend the weighted average maturity of the Fund's portfolio. Growing evidence of a softening economy called for a strong focus on credit review and analysis. We will continue to proceed with caution as we await a more stable market environment. There is no guarantee that any sectors mentioned will continue to perform as discussed herein or that securities in such sectors will be held by the Fund in the future. 2
PORTFOLIO COMPOSITION Variable Rate Municipal Obligations 88.0% Municipal Notes 6.3 Tax-Exempt Commercial Paper 5.7
MATURITY SCHEDULE 1-30 Days 88.8% 31-60 Days 2.5 61-90 Days 1.2 91-120 Days 0.6 121+ Days 6.9
Data as of December 31, 2007. Subject to change daily. All percentages for portfolio composition and maturity schedule are as a percentage of total investments. These data are provided for informational purposes only and should not be deemed a recommendation to buy or sell the securities mentioned. Morgan Stanley is a full-service securities firm engaged in securities trading and brokerage activities, investment banking, research and analysis, financing and financial advisory services. INVESTMENT STRATEGY THE FUND WILL INVEST IN HIGH QUALITY, SHORT-TERM SECURITIES THAT ARE NORMALLY MUNICIPAL OBLIGATIONS THAT PAY INTEREST EXEMPT FROM FEDERAL INCOME TAXES. THE FUND'S "INVESTMENT ADVISER," MORGAN STANLEY INVESTMENT ADVISORS INC., SEEKS TO MAINTAIN THE FUND'S SHARE PRICE AT $1.00. THE SHARE PRICE REMAINING STABLE AT $1.00 MEANS THAT THE FUND WOULD PRESERVE THE PRINCIPAL VALUE OF YOUR INVESTMENT. AN INVESTMENT IN THE FUND IS NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND. FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS EACH MORGAN STANLEY FUND PROVIDES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS IN ITS SEMIANNUAL AND ANNUAL REPORTS WITHIN 60 DAYS OF THE END OF THE FUND'S SECOND AND FOURTH FISCAL QUARTERS. THE SEMIANNUAL REPORTS AND THE ANNUAL REPORTS ARE FILED ELECTRONICALLY WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC) ON FORM N-CSRS AND FORM N-CSR, RESPECTIVELY. MORGAN STANLEY ALSO DELIVERS THE SEMIANNUAL AND ANNUAL REPORTS TO FUND SHAREHOLDERS AND MAKES THESE REPORTS AVAILABLE ON ITS PUBLIC WEB SITE, WWW.MORGANSTANLEY.COM. EACH MORGAN STANLEY FUND ALSO FILES A COMPLETE SCHEDULE OF PORTFOLIO HOLDINGS WITH THE SEC FOR THE FUND'S FIRST AND THIRD FISCAL QUARTERS ON FORM N-Q. MORGAN STANLEY DOES NOT DELIVER THE REPORTS FOR THE FIRST AND THIRD FISCAL QUARTERS TO SHAREHOLDERS, NOR ARE THE REPORTS POSTED TO THE MORGAN STANLEY PUBLIC WEB SITE. YOU MAY, HOWEVER, OBTAIN THE FORM N-Q FILINGS (AS WELL AS THE FORM N-CSR AND N-CSRS FILINGS) BY ACCESSING THE SEC'S WEB SITE, HTTP://WWW.SEC.GOV. YOU MAY ALSO REVIEW AND COPY THEM AT THE SEC'S PUBLIC 3 REFERENCE ROOM IN WASHINGTON, DC. INFORMATION ON THE OPERATION OF THE SEC'S PUBLIC REFERENCE ROOM MAY BE OBTAINED BY CALLING THE SEC AT (800) SEC-0330. YOU CAN ALSO REQUEST COPIES OF THESE MATERIALS, UPON PAYMENT OF A DUPLICATING FEE, BY ELECTRONIC REQUEST AT THE SEC'S E-MAIL ADDRESS (PUBLICINFO@SEC.GOV) OR BY WRITING THE PUBLIC REFERENCE SECTION OF THE SEC, WASHINGTON, DC 20549-0102. HOUSEHOLDING NOTICE TO REDUCE PRINTING AND MAILING COSTS, THE FUND ATTEMPTS TO ELIMINATE DUPLICATE MAILINGS TO THE SAME ADDRESS. THE FUND DELIVERS A SINGLE COPY OF CERTAIN SHAREHOLDER DOCUMENTS, INCLUDING SHAREHOLDER REPORTS, PROSPECTUSES AND PROXY MATERIALS, TO INVESTORS WITH THE SAME LAST NAME WHO RESIDE AT THE SAME ADDRESS. YOUR PARTICIPATION IN THIS PROGRAM WILL CONTINUE FOR AN UNLIMITED PERIOD OF TIME UNLESS YOU INSTRUCT US OTHERWISE. YOU CAN REQUEST MULTIPLE COPIES OF THESE DOCUMENTS BY CALLING (800) 869-NEWS, 8:00 A.M. TO 8:00 P.M., ET. ONCE OUR CUSTOMER SERVICE CENTER HAS RECEIVED YOUR INSTRUCTIONS, WE WILL BEGIN SENDING INDIVIDUAL COPIES FOR EACH ACCOUNT WITHIN 30 DAYS. 4 EXPENSE EXAMPLE As a shareholder of the Fund, you incur ongoing costs, including advisory fees; distribution and service (12b-1) fees; and other Fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period 07/01/07 - 12/31/07. ACTUAL EXPENSES The first line of the table below provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the table below provides information about hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing cost of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only. Therefore, the second line of the table is useful in comparing ongoing costs, and will not help you determine the relative total cost of owning different funds that have transactional costs, such as sales charges (loads), and redemption fees, or exchange fees.
BEGINNING ENDING EXPENSES PAID ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD* -------------------- -------------------- -------------------- 07/01/07 - 07/01/07 12/31/07 12/31/07 -------------------- -------------------- -------------------- Actual (1.62% return)................... $1,000.00 $1,016.20 $2.20 Hypothetical (5% annual return before expenses)............................. $1,000.00 $1,023.16 $2.20
- --------- * Expenses are equal to the Fund's annualized expense ratio of 0.43% multiplied by the average account value over the period, multiplied by 185**/365 (to reflect the one-half year period). ** Adjusted to reflect non-business days accruals. 5 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED)
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ Short-Term Variable Rate Municipal Obligations (87.6%) Alabama $ 19,600 Infirmary Health System Special Care Facilities Financing Authority of Mobile, Ser 2006 B...................... 3.43% 01/08/08 $ 19,600,000 30,000 Lower Alabama Gas District, Gas Supply Ser 2007 A.................................. 3.50 01/08/08 30,000,000 129,800 Southeast Alabama Gas District, Supply Ser 2007 A.................................. 3.75 01/02/08 129,800,000 Alaska Alaska Housing Finance Corporation, 65,400 Home Mortgage Ser 2007 A................ 3.45 01/08/08 65,400,000 30,000 Home Mortgage Ser 2007 D................ 3.40 01/08/08 30,000,000 Arizona 16,700 Pine Ridge Village/Campus Heights LLC, Northern Arizona University Ser 2005 (FGIC Insd)............................. 3.48 01/08/08 16,700,000 26,605 Sun Devil Energy Center LLC, Arizona State University Ser 2004 (FGIC Insd)......... 3.48 01/08/08 26,605,000 California 242,050 Enhanced Return Puttable Floating Option Tax-Exempt Receipts, Ser 2007 P-FLOATs Ser EC-1008 & EC-1011................... 3.82 01/08/08 242,050,000 81,800 Puttable Floating Option Tax-Exempt Receipts, Ser 2007 P-FLOATs Ser EC- 1177.................................... 3.82 01/08/08 81,800,000 Colorado 12,000 Broomfield Urban Renewal Authority, Broomfield Event Center Ser 2005........ 3.44 01/08/08 12,000,000 12,480 Colorado, UCDHSC Fitzsimons Academic Facilities Ser 2005 B COPs P-FLOATs PT- 3336 (MBIA Insd)........................ 3.59 01/08/08 12,480,000 6,255 Colorado Educational & Cultural Facilities Authority, Oklahoma's Public Radio Ser 2005 A.................................. 3.44 01/08/08 6,255,000 40,400 Colorado Health Facilities Authority, Catholic Health Initiatives Ser 2004 B- 4....................................... 3.40 01/08/08 40,400,000 41,000 Colorado Springs, Utilities System Sub Lien Ser 2007 A......................... 3.48 01/08/08 41,000,000 13,155 Midcities Metropolitan District No 1, STARS BNP Ser 2004-110.................. 3.52 01/08/08 13,155,000 14,010 Westminster, Multifamily Housing Camden Arbors Apartments Ser 2004.............. 3.42 01/08/08 14,010,000 Delaware 8,595 New Castle County, University Courtyard Apartments Ser 2005..................... 3.48 01/08/08 8,595,000 13,010 University of Delaware, Ser 1998.......... 3.40 01/08/08 13,010,000 District of Columbia 1,400 District of Columbia, Public Welfare Foundation Ser 2000..................... 3.44 01/08/08 1,400,000
See Notes to Financial Statements 6 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ Florida $ 13,800 Cape Coral, Water & Sewer Ser 2006 P- FLOATs PT-3695 (AMBAC Insd)............. 3.61% 01/08/08 $ 13,800,000 20,655 Capital Trust Agency, Multifamily Housing Floater-TRs Ser 2005 F7................. 3.57 01/08/08 20,655,000 24,500 Collier County Health Facilities Authority, The Moorings Inc Ser 2005.... 3.48 01/08/08 24,500,000 59,625 Dade County, Water & Sewer System Ser 1994 (FGIC Insd)............................. 3.46 01/08/08 59,625,000 19,000 Gainesville, Utilities System 2007 Ser A.. 3.45 01/08/08 19,000,000 46,575 Highlands County Health Facilities Authority, Adventist Health System/Sunbelt Obligated Group Ser 2007 A-1..................................... 3.49 01/08/08 46,575,000 177,540 JEA, Electric System Ser Three 2007 A & B (CIFG Insd)............................. 3.45 01/08/08 177,540,000 60,850 Miami-Dade County, Water & Sewer System Ser 2005 (FSA Insd)..................... 3.43 01/08/08 60,850,000 8,600 Miami-Dade County Educational Facilities Authority, Carlos Albizu University Ser 2000.................................... 3.53 01/08/08 8,600,000 36,210 North Broward Hospital District, Ser 2005 A (MBIA Insd)........................... 3.47 01/08/08 36,210,000 88,450 Orlando Utilities Commission, Water & Electric Ser 2002 A..................... 3.38 01/08/08 88,450,000 10,000 Pinellas County Health Facilities Authority, Pooled Loan Ser 1985 (AMBAC Insd)................................... 3.80 01/02/08 10,000,000 Port St Lucie, 44,560 Municipal Complex Ser 2007 COPs (MBIA Insd)................................... 3.45 01/08/08 44,560,000 35,895 Utility System Ser 2005 (MBIA Insd)..... 3.45 01/08/08 35,895,000 80,595 Puttable Floating Option Tax-Exempt Receipts, Miami-Dade County School District Ser 2007 A BANs P-FLOATs MT- 413..................................... 3.97 01/08/08 80,595,000 45,595 Seminole County, Water & Sewer Ser 2007 PUTTERs Ser 2039........................ 3.50 01/08/08 45,595,000 Georgia 16,610 DeKalb County Hospital Authority, DeKalb Medical Center Ser 2005................. 3.44 01/08/08 16,610,000 16,550 DeKalb Private Hospital Authority, Egleston Children's Health Care System Ser 1994 B.............................. 3.44 01/08/08 16,550,000 62,400 Enhanced Return Puttable Floating Option Tax-Exempt Receipts, Main Street Gas Ser 2006 P-FLOATs Ser EC-1029............... 4.02 01/08/08 62,400,000 11,000 Floyd County Development Authority, Berry College Ser 2006........................ 3.44 01/08/08 11,000,000 37,500 Gainesville & Hall County Hospital Authority, Northeast Georgia Health System Inc Ser 2007 C (MBIA Insd)....... 3.47 01/08/08 37,500,000 71,835 Gwinnett County Hospital Authority, Gwinnett Hospital System Ser 2007 B & D (FSA Insd).............................. 3.46 01/08/08 71,835,000 Hall County & Gainesville Hospital Authority, 41,620 Northeast Georgia Health System Inc Ser 2005 B (MBIA Insd)...................... 3.47 01/08/08 41,620,000 94,800 Northeast Georgia Health System Inc Ser 2007 G (AGC Insd)....................... 3.47 01/08/08 94,800,000 50,000 Metropolitan Atlanta Rapid Transit Authority, Sales Tax Ser 2007 B ROCs II- R Ser 9158 (FSA Insd)................... 3.50 01/08/08 50,000,000
See Notes to Financial Statements 7 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ $ 36,500 Georgia Municipal Electric Authority, General Sub Ser 1985 C.................. 3.40% 01/08/08 $ 36,500,000 50,160 Private Colleges & Universities Authority, Emory University 2000 Ser B & 2005 Ser B-2..................................... 3.35 01/08/08 50,160,000 Hawaii 13,565 Hawaii, ROCs II-R Ser 6012 (MBIA Insd).... 3.50 01/08/08 13,565,000 Illinois Chicago, 7,380 Chicago O'Hare International Airport Third Lien Ser 2005 A P-FLOATs PT-3340 (MBIA Insd).......... 3.70 01/08/08 7,380,000 25,000 Refg Ser 2003 B (FSA Insd).............. 3.42 01/08/08 25,000,000 16,500 Refg Ser 2005 D (FSA Insd).............. 3.43 01/08/08 16,500,000 40,000 Refg Ser 2007 E (MBIA Insd)............. 3.42 01/08/08 40,000,000 13,605 Ser 2002 B (FGIC Insd).................. 3.44 01/08/08 13,605,000 46,500 Chicago Board of Education, Ser 2005 E-1 (CIFG Insd)............................. 3.44 01/08/08 46,500,000 93,400 Cook County, Ser 2002 B................... 3.42 01/08/08 93,400,000 15,000 Crestwood, Trinity Christian College Association Ser 2007.................... 3.44 01/08/08 15,000,000 Illinois Development Finance Authority, 28,400 Evanston Northwestern Healthcare Corporation Ser 2001 A.................. 3.43 01/08/08 28,400,000 6,330 Jewish Federation of Metropolitan Chicago Ser 1999 (AMBAC Insd).......................... 3.43 01/08/08 6,330,000 14,300 Museum of Contemporary Art Ser 1994..... 3.43 01/08/08 14,300,000 38,900 Presbyterian Home Lake Forest Place Ser 1996 (FSA Insd)......................... 3.42 01/08/08 38,900,000 2,600 Young Men's Christian Association of Metropolitan Chicago Ser 2001.............................. 3.43 01/08/08 2,600,000 Illinois Finance Authority, 13,200 Dominican University Ser 2006........... 3.43 01/08/08 13,200,000 40,000 Edward Hospital Obligated Group Ser 2007 B-1 (AMBAC Insd)........................ 3.46 01/08/08 40,000,000 10,000 Elmhurst Memorial Healthcare Municipal CRVS Ser 2006-2001...................... 3.50 01/08/08 10,000,000 59,350 Loyola University Health System Ser 2006 C....................................... 3.40 01/08/08 59,350,000 21,155 Resurrection Health Care System Ser 2005 C....................................... 3.45 01/08/08 21,155,000 7,500 Three Crowns Park Ser 2006 C............ 3.44 01/08/08 7,500,000 40,000 Illinois Health Facilities Authority, Northwestern Memorial Hospital Ser 1995.................................... 3.43 01/08/08 40,000,000 11,595 Kane, Cook & DuPage Counties, School District #U-46 PUTTERs Ser 426 (AMBAC Insd)................................... 3.52 01/08/08 11,595,000 74,350 Metropolitan Pier & Exposition Authority, McCormick Place Expansion Ser 2002 A ROCs II-R Ser 10026Z (MBIA Insd)........ 3.51 01/08/08 74,350,000 13,050 Oak Forest, Homewood South Suburban Mayors & Managers Association Ser 1989......... 3.44 01/08/08 13,050,000 33,395 Regional Transportation Authority, Refg Ser 2005 B.............................. 3.45 01/08/08 33,395,000
See Notes to Financial Statements 8 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ Indiana $ 49,700 Indiana Health & Educational Facility Financing Authority, Sisters of St Francis Health System Ser 2006 A (MBIA Insd)................................... 3.44% 01/08/08 $ 49,700,000 Indiana Health Facility Financing Authority, 49,000 Ascension Health Ser 2001 A............. 3.47 01/08/08 49,000,000 11,765 Deaconess Hospital Ser 2004 B........... 3.44 01/08/08 11,765,000 45,075 Indianapolis Local Public Improvement Bond Bank, Waterworks Ser 2005 G-3 & H (MBIA Insd)................................... 3.44 01/08/08 45,075,000 26,900 Richmond Hospital Authority, Reid Hospital Ser 2005 A (FSA Insd)................... 3.47 01/08/08 26,900,000 17,000 St Joseph County, University of Notre Dame du Lac Ser 2007......................... 3.35 01/08/08 17,000,000 10,940 Zionsville Community Schools Building Corporation, Boone County Ser 2005 A P- FLOATs PT-2870 (FSA Insd)............... 3.59 01/08/08 10,940,000 Iowa Iowa Finance Authority, 25,390 Iowa Health System Ser 2005 A-1 (FGIC Insd)................................... 3.47 01/08/08 25,390,000 9,350 Northcrest Inc Ser 2006................. 3.44 01/08/08 9,350,000 Kentucky 10,800 Georgetown, Industrial Building Refg Georgetown College Ser 2006............. 3.44 01/08/08 10,800,000 21,190 Henderson County, Community United Methodist Hospital Inc Ser 2003 B....... 3.44 01/08/08 21,190,000 Kentucky Public Energy Authority Inc, 139,710 Gas Supply Ser 2006 A................... 3.75 01/02/08 139,710,000 90,435 Gas Supply Senior Ser 2007 A-2.......... 3.33 01/08/08 90,435,000 19,250 Madisonville, Trover Clinic Foundation Inc Ser 2006 (AGC Insd)..................... 3.48 01/08/08 19,250,000 36,585 Ohio County, Big Rivers Electric Corp Ser 1983 (AMBAC Insd)....................... 3.45 01/08/08 36,585,000 10,275 Williamsburg, Cumberland College Ser 2002.................................... 3.44 01/08/08 10,275,000 Louisiana 50,000 Ascension Parish Industrial Development Board, IMTT-Geismar Ser 2007............ 3.44 01/08/08 50,000,000 11,187 Louisiana Municipal Natural Gas Purchasing & Distribution Authority, Gas Project No 1 Ser 2006 PUTTERs Ser 1411Q............ 3.52 01/08/08 11,187,000 Louisiana Public Facilities Authority, 50,000 CHRISTUS Health Ser 2005 C Subser C-2 (AMBAC Insd)............................ 3.46 01/08/08 50,000,000 40,000 CHRISTUS Health Ser 2007 C (MBIA Insd).. 3.46 01/08/08 40,000,000 Maryland 22,545 Maryland, 2007 First Series ROCs II-R Ser 10042................................... 3.50 01/08/08 22,545,000 Maryland Health & Higher Educational Facilities Authority, 9,100 Catholic Health Initiatives Ser 1997 B.. 3.43 01/08/08 9,100,000 15,400 Mercy Medical Center Ser 2006 P-FLOATs MT-276.................................. 3.97 01/08/08 15,400,000
See Notes to Financial Statements 9 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ Massachusetts $ 71,700 Massachusetts, Ser 2005 A................. 3.46% 01/08/08 $ 71,700,000 30,750 Massachusetts Water Resources Authority, Multi-Modal Sub 2000 Ser C (FGIC Insd).. 3.45 01/08/08 30,750,000 95,015 University of Massachusetts Building Authority, Ser 2006-1 (AMBAC Insd)...... 3.46 01/08/08 95,015,000 Michigan Detroit, 32,000 Sewage Disposal System Second Lien Ser 2006 A (FGIC Insd)...................... 3.44 01/08/08 32,000,000 40,000 Water Supply System Refg Second Lien Ser 2001-C (FGIC Insd)........................... 3.50 01/08/08 40,000,000 22,000 Kalamazoo Hospital Finance Authority, Bronson Methodist Hospital Ser 2006 (FSA Insd)................................... 3.46 01/08/08 22,000,000 Kent Hospital Finance Authority, 17,800 Metropolitan Hospital Ser 2005 B........ 3.43 01/08/08 17,800,000 86,010 Spectrum Health Ser 1998 (MBIA Insd) & Ser 2007 B-2 (FGIC Insd)........................... 3.46 01/08/08 86,010,000 Michigan Hospital Finance Authority, 96,300 Ascension Health Ser 1999 B-2 & B-4..... 3.45 01/08/08 96,300,000 83,560 Henry Ford Health System Ser 2006 B & C....................................... 3.46 01/08/08 83,560,000 95,000 Michigan Housing Development Authority, Single-Family Mortgage Ser 2007 E & F (AMT)................................... 3.54 01/08/08 95,000,000 6,000 Michigan Strategic Fund, The Van Andel Research Institute Ser 2001............. 3.43 01/08/08 6,000,000 Minnesota Minneapolis, 34,785 Fairview Health Services Ser 2005 B (AMBAC Insd)............................ 3.45 01/08/08 34,785,000 32,195 Fairview Health Services Ser 2005 C (MBIA Insd)............................. 3.47 01/08/08 32,195,000 Mississippi 17,575 Mississippi, Capital Improvement Ser 2003 E....................................... 3.40 01/08/08 17,575,000 49,400 Perry County, Leaf River Forest Products Inc Ser 2002............................ 3.40 01/08/08 49,400,000 Missouri 14,800 Bi-State Development Agency of the Missouri-Illinois Metropolitan District, Metrolink Cross County Extension Ser 2002 A (FSA Insd)............................ 3.40 01/08/08 14,800,000 126,905 Kansas City Industrial Development Authority, Kansas City Downtown Redevelopment District Ser 2005 B & C (AMBAC Insd) & Ser 2006 A (AMBAC Insd)................................... 3.47 01/08/08 126,905,000 6,805 Kansas City Tax Increment Financing Commission, Chouteau I-35 Ser 2003 A (MBIA Insd)............................. 3.47 01/08/08 6,805,000
See Notes to Financial Statements 10 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ Nebraska $148,733 American Public Energy Agency, National Public Gas Agency 2005 Ser A............ 3.50% 01/08/08 $ 148,733,000 Nevada Clark County, 24,100 Airport Improvement Refg 1993 Ser A (MBIA Insd)............................. 3.47 01/08/08 24,100,000 117,315 Airport System Sub-Lien Ser 2001C (FGIC Insd) & Ser 2005 D-1 (FGIC Insd)........................... 3.47 01/08/08 117,315,000 New Hampshire 8,300 New Hampshire Health & Education Facilities Authority, LRG Healthcare Ser 2006 B.................................. 3.49 01/08/08 8,300,000 New Jersey 20,340 New Jersey Economic Development Authority, School Facilities Construction Ser 2005 O ROCs II-R Ser 437..................... 3.49 01/08/08 20,340,000 New York 36,000 New York, Fiscal 2008 Sub Ser D-4......... 3.38 01/08/08 36,000,000 24,675 New York City, Fiscal 2006 Sub Ser I-4.... 3.34 01/08/08 24,675,000 40,500 New York City Industrial Development Agency, One Bryant Park LLC Ser 2004 A.......... 3.48 01/08/08 40,500,000 34,700 New York City Municipal Water Finance Authority, Fiscal 2001 Sub-Ser F-2................. 3.34 01/08/08 34,700,000 38,160 Triborough Bridge & Tunnel Authority, Ser 2005 B-3................................ 3.38 01/08/08 38,160,000 9,700 Ulster County Industrial Development Agency, Kingston Regional Senior Living Corp - Woodland Pond at New Paltz Ser 2007 C.................................. 3.39 01/08/08 9,700,000 North Carolina Charlotte-Mecklenburg Hospital Authority, Carolinas HealthCare System 22,350 Ser 2005 C........................... 3.74 01/02/08 22,350,000 53,855 Ser 2007 B (AMBAC Insd).............. 3.45 01/08/08 53,855,000 6,460 Mecklenburg County, Ser 2004 COPs......... 3.48 01/08/08 6,460,000 12,600 North Carolina Capital Facilities Agency, Capital Area YMCA Ser 2002.............. 3.50 01/08/08 12,600,000 24,665 North Carolina Eastern Municipal Power Agency, Power System Ser 2006 A (MBIA Insd)................................... 3.46 01/08/08 24,665,000 North Carolina Medical Care Commission, 114,930 Duke University Health System Ser 2005 A & C..................................... 3.46 01/08/08 114,930,000 33,200 Firsthealth of the Carolinas Ser 2002... 3.47 01/08/08 33,200,000 45,100 Raleigh, Downtown Improvement Ser 2005 B COPs.................................... 3.46 01/08/08 45,100,000 40,000 Winston-Salem, Water & Sewer System Ser 2007 B.................................. 3.48 01/08/08 40,000,000
See Notes to Financial Statements 11 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ Ohio $ 35,000 Montgomery County, Catholic Health Initiatives Ser 2006 B-1 & B-2...................... 3.40% 01/08/08 $ 35,000,000 15,420 Portage County, Robinson Memorial Hospital Ser 2005................................ 3.48 01/08/08 15,420,000 Oklahoma 16,000 Oklahoma Development Finance Authority, Inverness Village Ser 2007 A............ 3.45 01/08/08 16,000,000 Oregon 37,600 Clackamas County Hospital Facility Authority, Legacy Health System Ser 2003.................................... 3.47 01/08/08 37,600,000 5,520 Oregon, Homeowner Ser 2005 A P-FLOATs MT- 133..................................... 3.51 01/08/08 5,520,000 56,005 Oregon Health Sciences University, OSHU Medical Group Ser 2004 A................ 3.37 01/08/08 56,005,000 Pennsylvania Allegheny County Industrial Development Authority, 10,900 Carnegie Museums of Pittsburgh Ser 2002.................................... 3.44 01/08/08 10,900,000 48,100 UPMC Children's Hospital Ser 2004 A..... 3.42 01/08/08 48,100,000 25,000 Cumberland County Municipal Authority, Asbury Pennsylvania Obligated Group Ser 2006.................................... 3.44 01/08/08 25,000,000 3,200 Derry Township Industrial & Commercial Development Authority, Hotel Tax Arena Ser 2000 A.............................. 3.42 01/08/08 3,200,000 20,660 Owen J Roberts School District, Ser 2004 (FSA Insd).............................. 3.46 01/08/08 20,660,000 15,000 Pennsylvania Higher Education Assistance Agency, Student Loan 2001 Ser A (AMBAC Insd) (AMT)............................. 3.46 01/08/08 15,000,000 Pennsylvania Turnpike Commission, 29,900 2002 Ser A-2............................ 3.40 01/08/08 29,900,000 8,000 2002 Ser B.............................. 3.42 01/08/08 8,000,000 Philadelphia, 57,600 Gas Works Sixth Ser 1998 (FSA Insd)..... 3.42 01/08/08 57,600,000 119,245 Water & Wastewater Ser 2003 (FSA Insd).. 3.46 01/08/08 119,245,000 170,400 Philadelphia Industrial Development Authority, Lease 2007 Ser B (FGIC Insd)................................... 3.37 01/08/08 170,400,000 60,000 Pittsburgh & Allegheny County Sports & Exhibition Authority, Commonwealth Lease Ser 2007 A (FSA Insd)................... 3.43 01/08/08 60,000,000 27,400 Puttable Floating Option Tax-Exempt Receipts, Lehigh County General Purpose Authority St Luke's Hospital of Bethlehem Ser 2007 P-FLOATs MT-511.............. 3.80 01/08/08 27,400,000 5,500 Washington County Authority, Girard Estate Ser 1999................................ 3.43 01/08/08 5,500,000 21,685 York General Authority, Harrisburg School District Subser 1996 B (AMBAC Insd)..... 3.45 01/08/08 21,685,000
See Notes to Financial Statements 12 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ South Carolina $ 37,500 Charleston Educational Excellence Finance Corporation, Charleston County School District Ser 2005 ROCs II-R Ser 471..... 3.50% 01/08/08 $ 37,500,000 13,100 Florence County, McLeod Regional Medical Center Ser 1985 A (FGIC Insd)........... 3.40 01/08/08 13,100,000 10,700 South Carolina Educational Facilities Authority, Charleston Southern University Ser 2003..................... 3.48 01/08/08 10,700,000 7,500 South Carolina Jobs - Economic Development Authority, Oconee Memorial Hospital Ser 2006 B (Radian Insd).................... 3.45 01/08/08 7,500,000 Tennessee 9,200 Chattanooga Health Educational & Housing Facility Board, The Baylor School Ser 2004.............. 3.44 01/08/08 9,200,000 32,900 Greeneville Health & Educational Facilities Board, Laughlin Memorial Hospital Ser 2004....................... 3.44 01/08/08 32,900,000 59,400 Jackson City, Jackson-Madison County General Hospital Ser 2006 B (AMBAC Insd)................................... 3.46 01/08/08 59,400,000 9,000 Jackson Health Educational & Housing Facility Board, Union University Ser 2005.................................... 3.44 01/08/08 9,000,000 Memphis & Shelby County Sports Authority, Inc, 15,000 Memphis Arena Ser 2007 A (MBIA Insd).... 3.48 01/08/08 15,000,000 35,000 Memphis Arena Ser 2007 B (MBIA Insd).... 3.42 01/08/08 35,000,000 17,945 Memphis Health Educational & Housing Facility Board, Watergrove Apartments Ser 2004................................ 3.48 01/08/08 17,945,000 Metropolitan Government of Nashville & Davidson County Health & Educational Facilities Board, 4,400 Ensworth School Ser 2002............. 3.44 01/08/08 4,400,000 7,135 Mary Queen of Angels Inc Ser 2000.... 3.44 01/08/08 7,135,000 29,705 Montgomery County Public Building Authority, Pooled Financing Ser 1997 & Ser 1999................................ 3.48 01/08/08 29,705,000 Tennergy Corporation, 25,420 Gas Ser 2006 A PUTTERs Ser 1258Q........ 3.52 01/08/08 25,420,000 49,085 Gas Ser 2006 B PUTTERs Ser 1260B........ 3.52 01/08/08 49,085,000 30,000 Tennessee Energy Acquisition Corporation, Gas Ser 2006 A Floaters Ser 2006-47TP... 3.53 01/08/08 30,000,000
See Notes to Financial Statements 13 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ Texas $ 6,475 Beaumont, Waterworks & Sewer System Ser 2005 P-FLOATs PT-2895 (MBIA Insd)....... 3.70% 01/08/08 $ 6,475,000 58,280 Brazos River Authority, TXU Electric Co Ser 2001 D-1 & D-2 (AMT)................ 3.60 01/08/08 58,280,000 6,095 Dallas Independent School District, Ser 2004 A ROCs II-R Ser 6038............... 3.50 01/08/08 6,095,000 8,545 El Paso Independent School District, Ser 2004 A ROCs II-R Ser 2129............... 3.50 01/08/08 8,545,000 Harris County Health Facilities Development Corporation, 66,895 Baylor College of Medicine Ser 2005 A (AMBAC Insd)............................ 3.46 01/08/08 66,895,000 65,000 CHRISTUS Health Ser 2005 Subser A-1 (AMBAC Insd)............................ 3.46 01/08/08 65,000,000 16,200 Methodist Hospital System Ser 2006 A.... 3.42 01/08/08 16,200,000 15,200 Harris County Industrial Development Corporation, Baytank Inc Ser 1998....... 3.43 01/08/08 15,200,000 5,130 Houston, Combined Utility System Ser 2004 ROCs II-R Ser 4559 (FSA Insd)........... 3.50 01/08/08 5,130,000 12,000 Lower Neches Valley Authority, Chevron USA Inc Ser 1987............................ 3.79 02/15/08 12,000,000 33,085 North Central Texas Health Facilities Development Corporation, Baylor Health Care System Ser 2006 A.................. 3.45 01/08/08 33,085,000 6,495 Port Arthur Independent School District, Ser 2005 P-FLOATs PT-2679 (FGIC Insd)... 3.70 01/08/08 6,495,000 Puttable Floating Option Tax-Exempts Receipts, 24,990 Texas Municipal Gas Acquisition & Supply Corp II Ser 2007 B P-FLOATs PT-4239........... 4.01 01/08/08 24,990,000 12,400 Texas Transportation Commission First Tier Ser 2006 P-FLOATs EC-1173 (MBIA Insd)................................... 4.01 01/08/08 12,400,000 29,000 San Antonio, Water System Sub Lien Ser 2003 B (MBIA Insd)...................... 3.45 01/08/08 29,000,000 49,700 Tarrant County Cultural Education Facilities Corporation, CHRISTUS Health Ser 2007 B (MBIA Insd).. 3.46 01/08/08 49,700,000 44,000 Texas Municipal Gas Acquisition & Supply Corp II, Ser 2007 B ROCs II-R Ser 10014.......... 3.57 01/08/08 44,000,000 60,000 University of Texas Regents, Permanent University Fund Notes Ser 2007 A........ 3.75 02/05/08 60,024,462 7,140 Upper Trinity Regional Water District, Regional Treated Water Supply System Refg Ser 2005 P-FLOATs PT-3290 (AMBAC Insd).......................... 3.70 01/08/08 7,140,000 Utah 15,000 Central Utah Water Conservancy District, Ser 1998 E (AMBAC Insd)................. 3.48 01/08/08 15,000,000 45,850 Murray City, IHC Health Services Inc Ser 2005 D.................................. 3.47 01/08/08 45,850,000
See Notes to Financial Statements 14 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIPAL AMOUNT IN COUPON DEMAND THOUSANDS RATE+ DATE* VALUE - ------------------------------------------------------------------------------------------ Various States $ 6,110 JPMorgan Chase & Co, I-PUTTERs Ser 1633P.. 3.57% 01/08/08 $ 6,110,000 5,625 Puttable Floating Option Tax-Exempts Receipts, Ser 2006 P-FLOATs EC-002................ 3.62 01/08/08 5,625,000 Vermont 16,455 Vermont Economic Development Authority, Wake Robin Corporation Ser 2006 B....... 3.42 01/08/08 16,455,000 11,000 Vermont Housing Finance Agency, West Block University of Vermont Apartments Ser 2004 A.................................. 3.45 01/08/08 11,000,000 Virginia 16,000 Chesapeake Hospital Authority, Chesapeake General Hospital Ser 2001A.............. 3.44 01/08/08 16,000,000 41,100 Loudoun County Industrial Development Authority, Howard Hughes Medical Institute Ser 2003 F.................... 3.45 01/08/08 41,100,000 Washington 9,675 Eclipse Funding Trust, Seattle Water System Ser 2005 Solar Eclipse Ser 2006-0002 (MBIA Insd)............................. 3.82 01/08/08 9,675,000 14,615 Energy Northwest, Columbia Generating Station Electric Ser 2006-A ROCs II-R Ser 6063................................ 3.50 01/08/08 14,615,000 13,830 King County Rural Library District, Ser 2005 P-FLOATs PT-3053 (MBIA Insd)....... 3.59 01/08/08 13,830,000 4,125 Pierce County, Puyallup School District No 3 PUTTERs Ser 415 (FSA Insd)............ 3.50 01/08/08 4,125,000 20,000 Washington Health Care Facilities Authority, Swedish Health Services Ser 2006.................................... 3.56 01/08/08 20,000,000 10,000 Washington State, Floater-TRs Ser 2006 P23U 2006 D (MBIA Insd)................. 3.64 01/02/08 10,000,000 135,545 Washington State Housing Commission, Mirabella Ser 2006 A.................... 3.78 01/02/08 135,545,000 Wisconsin 6,185 Wisconsin, Clean Water 2004 Ser 1 ROCs II- R Ser 2165 (MBIA Insd).................. 3.50 01/08/08 6,185,000 -------------- Total Short-Term Variable Rate Municipal Obligations (Cost $7,415,534,462)............................................... 7,415,534,462 --------------
See Notes to Financial Statements 15 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCI- PAL AMOUNT YIELD TO IN MATURITY THOU- COUPON MATURITY ON DATE OF SANDS RATE DATE PURCHASE VALUE - ------------------------------------------------------------------------------------------------------------------- Tax-Exempt Commercial Paper (5.7%) Illinois Chicago, $39,311 Chicago O'Hare International Airport 2005 Program - 2007 Issue Ser B......................... 3.10% 02/14/08 3.10% $ 39,311,000 51,000 Water System 2004 Ser A.............................. 2.72 05/29/08 2.72 51,000,000 Kentucky 30,000 Kentucky Asset Liability Commission, General Fund Second Ser 2005 A-1.................................. 3.47 02/07/08 3.47 30,000,000 Maryland 56,005 Maryland Health & Educational Facilities Authority, Johns Hopkins Health System Ser 2004 A......................................... 3.34 01/10/08 3.34 56,005,000 Massachusetts 50,000 Massachusetts, Ser F................................... 3.16 01/25/08 3.16 50,000,000 Michigan 80,000 Michigan, Multi-Modal School Loan Ser 2005 C........... 3.50 10/28/08 3.50 80,000,000 Texas Dallas Area Rapid Transit, 10,000 Senior Sub Lien Ser 2001............................. 2.85 02/14/08 2.85 10,000,000 15,000 Senior Sub Lien Ser 2001............................. 3.42 03/17/08 3.42 15,000,000 30,000 Harris County, Notes Ser A-1........................... 3.50 03/06/08 3.50 30,000,000 Houston, 30,000 Combined Utility System Ser 2004 A................... 3.50 01/24/08 3.50 30,000,000 35,000 Ser D................................................ 3.10 04/03/08 3.10 35,000,000 Lower Colorado River Authority, 18,300 Ser A................................................ 3.10 02/06/08 3.10 18,300,000 20,000 Transmission Service Corp Ser 2003................... 3.40 02/05/08 3.40 20,000,000 19,000 San Antonio, Electric & Gas Ser 1995 A................. 3.25 03/10/08 3.25 19,000,000 -------------- Total Tax-Exempt Commercial Paper (Cost $483,616,000)................................... 483,616,000 -------------- Short-Term Municipal Notes (6.2%) California 98,000 California, Ser 2007-2008 RANs, dtd 11/01/07......................................... 4.00 06/30/08 3.37 98,299,787 60,000 Los Angeles Unified School District, Ser 2007 A TRANs, dtd 12/11/07......................................... 4.00 12/29/08 3.18 60,478,139 Colorado 65,000 Colorado, Education Loan Ser 2007 A TRANs, dtd 07/16/07............................................. 4.25 08/05/08 3.74 65,175,247
See Notes to Financial Statements 16 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued
PRINCIP- AL AMOUNT YIELD TO IN MATURITY THOU- COUPON MATURITY ON DATE OF SANDS RATE DATE PURCHASE VALUE - ------------------------------------------------------------------------------------------------------------------- Indiana Indiana Bond Bank, $20,000 Advance Funding Ser 2007 A, dtd 02/01/07............. 4.25% 01/31/08 3.65% $ 20,009,527 19,000 Midyear Funding Notes Ser 2007 A, dtd 06/26/07....................................... 4.50 05/20/08 3.75 19,052,715 Massachusetts 20,000 Pioneer Valley Transit Authority, Ser 2007 RANs, dtd 08/03/07............................................. 4.25 08/01/08 4.10 20,016,736 Michigan 60,000 Michigan, Fiscal 2008 Ser A, dtd 12/20/07.............. 4.00 09/30/08 2.93 60,467,261 New York 22,500 Greater Southern Tier Board of Cooperative Educational Services, Supervisory District Ser 2007 RANs, dtd 09/25/07........................ 4.25 06/30/08 3.66 22,563,934 Oregon 70,000 Oregon, Ser 2007 A TANs, dtd 08/16/07.................. 4.50 06/30/08 3.63 70,291,926 Pennsylvania 20,000 Temple University Funding Ser 2007, dtd 04/25/07....... 4.25 04/24/08 3.62 20,037,854 South Carolina 39,810 South Carolina Association of Governmental Organizations, Ser 2007 C COPs, dtd 09/18/07....................................... 4.00 03/03/08 3.66 39,832,613 Washington 30,000 King County, Ser 2007 BANs, dtd 11/01/07............... 4.25 10/30/08 3.42 30,199,780 -------------- Total Short-Term Municipal Notes (Cost $526,425,519).................................... 526,425,519 -------------- Total Investments (Cost $8,425,575,981) (a)................................ 99.5% 8,425,575,981 Other Assets in Excess of Liabilities...................................... 0.5 38,899,805 ----- -------------- Net Assets................................................................. 100.0% $8,464,475,786 ===== ==============
See Notes to Financial Statements 17 Active Assets Tax-Free Trust PORTFOLIO OF INVESTMENTS - DECEMBER 31, 2007 (UNAUDITED) continued - ---------- AMT Alternative Minimum Tax. BANs Bond Anticipation Notes. COPs Certificates of Participation. CRVS Custodial Residual & Variable Securities. Floater-TRs Floating Rate Trust Receipts. I-PUTTERs Income Puttable Tax-Exempt Receipts. P-FLOATs Puttable Floating Option Tax-Exempt Receipts. PUTTERs Puttable Tax-Exempt Receipts. RANs Revenue Anticipation Notes. ROCs Reset Option Certificates. STARS Short-Term Adjustable Rate Securities. TANs Tax Anticipation Notes. TRANs Tax Revenue Anticipation Notes. + Rate shown is the rate in effect at December 31, 2007. * Date on which the principal amount can be recovered through demand. (a) Cost is the same for federal income tax purposes.
Bond Insurance: - --------------- AGC Assured Guaranty Corporation. AMBAC AMBAC Assurance Corporation. CIFG CIFG Assurance North America Inc. FGIC Financial Guaranty Insurance Company. FSA Financial Security Assurance Inc. MBIA Municipal Bond Investors Assurance Corporation. Radian Radian Asset Assurance Inc.
See Notes to Financial Statements 18 Active Assets Tax-Free Trust FINANCIAL STATEMENTS Statement of Assets and Liabilities December 31, 2007 (unaudited) Assets: Investments in securities, at value (cost $8,425,575,981)....................................... $8,425,575,981 Cash.......................................................... 140,881 Interest receivable........................................... 41,544,674 Prepaid expenses and other assets............................. 230,319 -------------- Total Assets............................................... 8,467,491,855 -------------- Liabilities: Payable for: Investment advisory fee.................................... 1,649,544 Distribution fee........................................... 687,135 Administration fee......................................... 343,567 Shares of beneficial interest redeemed..................... 38,198 Transfer agent fee......................................... 3,335 Accrued expenses and other payables........................... 294,290 -------------- Total Liabilities.......................................... 3,016,069 -------------- Net Assets................................................. $8,464,475,786 ============== Composition of Net Assets: Paid-in-capital............................................... $8,464,272,015 Accumulated undistributed net investment income............... 62,971 Accumulated undistributed net realized gain................... 140,800 -------------- Net Assets................................................. $8,464,475,786 ============== Net Asset Value Per Share 8,464,312,309 shares outstanding (unlimited shares authorized of $.01 par value).......................................... $1.00 =====
See Notes to Financial Statements 19 Active Assets Tax-Free Trust FINANCIAL STATEMENTS continued Statement of Operations For the six months ended December 31, 2007 (unaudited) Net Investment Income: Interest Income................................................ $132,638,405 ------------ Expenses Investment advisory fee........................................ 9,015,486 Distribution fee............................................... 3,686,351 Administration fee............................................. 1,843,176 Transfer agent fees and expenses............................... 774,629 Registration fees.............................................. 125,279 Custodian fees................................................. 147,149 Shareholder reports and notices................................ 68,903 Trustees' fees and expenses.................................... 52,779 Professional fees.............................................. 31,783 Other.......................................................... 210,282 ------------ Total Expenses.............................................. 15,955,817 Less: expense offset........................................... (76,107) ------------ Net Expenses................................................ 15,879,710 ------------ Net Investment Income....................................... 116,758,695 Net Realized Gain........................................... 83,065 ------------ Net Increase................................................... $116,841,760 ============
See Notes to Financial Statements 20 Active Assets Tax-Free Trust FINANCIAL STATEMENTS continued Statements of Changes in Net Assets
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED DECEMBER 31, 2007 JUNE 30, 2007 ----------------- -------------- (unaudited) Increase (Decrease) in Net Assets: Operations: Net investment income............................. $ 116,758,695 $ 185,290,775 Net realized gain................................. 83,065 66,339 -------------- -------------- Net Increase................................... 116,841,760 185,357,114 Dividends to shareholders from net investment income.......................................... (116,745,131) (185,282,618) Net increase from transactions in shares of beneficial interest............................. 2,310,600,073 1,516,617,029 -------------- -------------- Net Increase................................... 2,310,696,702 1,516,691,525 Net Assets: Beginning of period............................... 6,153,779,084 4,637,087,559 -------------- -------------- End of Period (Including accumulated undistributed net investment income of $62,971 and $49,407, respectively)................................... $8,464,475,786 $6,153,779,084 ============== ==============
See Notes to Financial Statements 21 Active Assets Tax-Free Trust NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2007 (UNAUDITED) 1. Organization and Accounting Policies Active Assets Tax-Free Trust (the "Fund") is registered under the Investment Company Act of 1940, as amended (the "Act"), as a diversified, open-end management investment company. The Fund's investment objective is to provide a high level of daily income which is exempt from federal income tax consistent with stability of principal and liquidity. The Fund was organized as a Massachusetts business trust on March 30, 1981 and commenced operations on July 7, 1981. The following is a summary of significant accounting policies: A. Valuation of Investments -- Portfolio securities are valued at amortized cost, which approximates market value, in accordance with Rule 2a-7 under the Act. B. Accounting for Investments -- Security transactions are accounted for on the trade date (date the order to buy or sell is executed). Realized gains and losses on security transactions are determined by the identified cost method. Discounts are accreted and premiums are amortized over the life of the respective securities and are included in interest income. Interest income is accrued daily. C. Federal Income Tax Policy -- It is the Fund's policy to comply with the requirements of Subchapter M of the Internal Revenue Code applicable to regulated investment companies and to distribute substantially all of its taxable and nontaxable income to its shareholders. Therefore, no federal income tax provision is required. The Fund files tax returns with the U.S. Internal Revenue Service and New York. The Fund adopted the provisions of the Financial Accounting Standards Board ("FASB") Interpretation No. 48 ("FIN 48") Accounting for Uncertainty in Income Taxes on June 29, 2007. FIN 48 sets forth a minimum threshold for financial statement recognition of the benefit of a tax position taken or expected to be taken in a tax return. The implementation of FIN 48 did not result in any unrecognized tax benefits in the accompanying financial statements. If applicable, the Fund recognizes interest accrued related to unrecognized tax benefits in interest expense and penalties in other expenses in the Statement of Operations. Each of the tax years in the four year period ended December 31, 2007, remains subject to examination by taxing authorities. D. Dividends and Distributions to Shareholders -- The Fund records dividends and distributions to shareholders as of the close of each business day. E. Use of Estimates -- The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. 22 Active Assets Tax-Free Trust NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2007 (UNAUDITED) continued 2. Investment Advisory/Administration Agreements Pursuant to an Investment Advisory Agreement with Morgan Stanley Investment Advisors Inc. (the "Investment Adviser"), the Fund pays the Investment Adviser an advisory fee, accrued daily and payable monthly, by applying the following annual rates to the net assets of the Fund determined as of the close of each business day: 0.45% to the portion of the daily net assets not exceeding $500 million; 0.375% to the portion of the daily net assets exceeding $500 million but not exceeding $750 million; 0.325% to the portion of the daily net assets exceeding $750 million but not exceeding $1 billion; 0.30% to the portion of the daily net assets exceeding $1 billion but not exceeding $1.5 billion; 0.275% to the portion of the daily net assets exceeding $1.5 billion but not exceeding $2 billion; 0.25% to the portion of the daily net assets exceeding $2 billion but not exceeding $2.5 billion; 0.225% to the portion of the daily net assets exceeding $2.5 billion but not exceeding $3 billion; 0.20% to the portion of the daily net assets exceeding $3 billion but not exceeding $15 billion; and 0.199% to the portion of the daily net assets exceeding $15 billion. Pursuant to an Administration Agreement with Morgan Stanley Services Company Inc. (the "Administrator"), an affiliate of the Investment Adviser, the Fund pays an administration fee, accrued daily and payable monthly, by applying the annual rate of 0.05% to the Fund's daily net assets. Under an agreement between the Administrator and State Street Bank and Trust Company ("State Street"), State Street provides certain administrative services to the Fund. For such services, the Administrator pays State Street a portion of the fee the Administrator receives from the Fund. 3. Plan of Distribution Morgan Stanley Distributors Inc. (the "Distributor"), an affiliate of the Investment Adviser and Administrator, is the distributor of the Fund's shares and in accordance with a Plan of Distribution (the "Plan") pursuant to Rule 12b- 1 under the Act, finances certain expenses in connection with the promotion of sales of Fund shares. Reimbursements for these expenses are made in monthly payments by the Fund to the Distributor, which will in no event exceed an amount equal to a payment at the annual rate of 0.15% of the Fund's average daily net assets during the month. Expenses incurred by the Distributor pursuant to the Plan in any fiscal year will not be reimbursed by the Fund through payments accrued in any subsequent fiscal year. For the six months ended December 31, 2007, the distribution fee was accrued at the annual rate of 0.10%. 23 Active Assets Tax-Free Trust NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2007 (UNAUDITED) continued 4. Security Transactions and Transactions with Affiliates The cost of purchases and proceeds from sales/maturities of portfolio securities for the six months ended December 31, 2007, aggregated $14,799,310,414 and $12,659,834,065, respectively. Morgan Stanley Trust, an affiliate of the Investment Adviser, Administrator and Distributor, is the Fund's transfer agent. The Fund has an unfunded noncontributory defined benefit pension plan covering certain independent Trustees of the Fund who will have served as independent Trustees for at least five years at the time of retirement. Benefits under this plan are based on factors which include years of service and compensation. The Trustees voted to close the plan to new participants and eliminate the future benefits growth due to increases to compensation after July 31, 2003. Aggregate pension costs for the six months ended December 31, 2007, included in Trustees' fees and expenses in the Statement of Operations amounted to $3,001. At December 31, 2007, the Fund had an accrued pension liability of $61,467 which is included in accrued expenses in the Statement of Assets and Liabilities. The Fund has an unfunded Deferred Compensation Plan (the "Compensation Plan") which allows each independent Trustee to defer payment of all, or a portion, of the fees he or she receives for serving on the Board of Trustees. Each eligible Trustee generally may elect to have the deferred amounts credited with a return equal to the total return on one or more of the Morgan Stanley funds that are offered as investment options under the Compensation Plan. Appreciation/depreciation and distributions received from these investments are recorded with an offsetting increase/decrease in the deferred compensation obligation and do not affect the net asset value of the Fund. 5. Shares of Beneficial Interest Transactions in shares of beneficial interest, at $1.00 per share, were as follows:
FOR THE SIX FOR THE YEAR MONTHS ENDED ENDED DECEMBER 31, 2007 JUNE 30, 2007 ----------------- --------------- (unaudited) Shares sold....................................... 18,198,047,907 28,033,735,995 Shares issued in reinvestment of dividends........ 116,614,819 185,206,802 --------------- --------------- 18,314,662,726 28,218,942,797 Shares redeemed................................... (16,004,062,653) (26,702,325,768) --------------- --------------- Net increase in shares outstanding................ 2,310,600,073 1,516,617,029 =============== ===============
24 Active Assets Tax-Free Trust NOTES TO FINANCIAL STATEMENTS - DECEMBER 31, 2007 (UNAUDITED) continued 6. Expense Offset The expense offset represents a reduction of the fees and expenses for interest earned on cash balances maintained by the Fund with the transfer agent and custodian. 7. Accounting Pronouncement In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS 157), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund's financial statement disclosures. 25 Active Assets Tax-Free Trust FINANCIAL HIGHLIGHTS Selected ratios and per share data for a share of beneficial interest outstanding throughout each period:
FOR THE SIX FOR THE YEAR ENDED JUNE 30, MONTHS ENDED ------------------------------------------ DECEMBER 31, 2007 2007 2006 2005 2004 2003 ----------------- ------ ------ ------ ------ ------ (unaudited) Selected Per Share Data: Net asset value, beginning of period......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ------ ------ ------ ------ ------ ------ Net income from investment operations........ 0.016 0.032 0.025 0.013 0.005 0.008 Less dividends from net investment income.... (0.016) (0.032) (0.025) (0.013) (0.005) (0.008) ------ ------ ------ ------ ------ ------ Net asset value, end of period............... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 ====== ====== ====== ====== ====== ====== Total Return................................. 1.62%(1) 3.22% 2.53% 1.32% 0.50% 0.81% Ratios to Average Net Assets: Total expenses (before expense offset)....... 0.43%(2) 0.45% 0.47% 0.49% 0.48% 0.48% Net investment income........................ 3.17%(2) 3.19% 2.57% 1.30% 0.50% 0.80% Supplemental Data: Net assets, end of period, in millions....... $8,464 $6,154 $4,637 $2,857 $2,858 $3,116
- ---------- (1) Not annualized. (2) Annualized.
See Notes to Financial Statements 26 (This Page Intentionally Left Blank) TRUSTEES Frank L. Bowman Michael Bozic Kathleen A. Dennis James F. Higgins Dr. Manuel H. Johnson Joseph J. Kearns Michael F. Klein Michael E. Nugent W. Allen Reed Fergus Reid OFFICERS Michael E. Nugent Chairperson of the Board Ronald E. Robison President and Principal Executive Officer J. David Germany Vice President Dennis F. Shea Vice President Amy R. Doberman Vice President Carsten Otto Chief Compliance Officer Stefanie V. Chang Yu Vice President Francis J. Smith Treasurer and Chief Financial Officer Mary E. Mullin Secretary TRANSFER AGENT Morgan Stanley Trust Harborside Financial Center, Plaza Two Jersey City, New Jersey 07311 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Deloitte & Touche LLP Two World Financial Center New York, New York 10281 LEGAL COUNSEL Clifford Chance US LLP 31 West 52nd Street New York, New York 10019 COUNSEL TO THE INDEPENDENT TRUSTEES Kramer Levin Naftalis & Frankel LLP 1177 Avenue of the Americas New York, New York 10036 INVESTMENT ADVISER Morgan Stanley Investment Advisors Inc. 522 Fifth Avenue New York, New York 10036 The financial statements included herein have been taken from the records of the Fund without examination by the independent auditors and accordingly they do not express an opinion thereon. This report is submitted for the general information of the shareholders of the Fund. For more detailed information about the Fund, its fees and expenses and other pertinent information, please read its Prospectus. The Fund's Statement of Additional information contains additional information about the Fund, including its trustees. It is available, without charge, by calling (800) 869-NEWS. This report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective Prospectus. Read the Prospectus carefully before investing. Morgan Stanley Distributors Inc., member FINRA (c) 2007 Morgan Stanley (MORGAN STANLEY LOGO) MORGAN STANLEY FUNDS Active Assets Tax-Free Trust Semiannual Report December 31, 2007 AATSAN IU08-00773P-Y12/07 Item 2. Code of Ethics. Not applicable for semiannual reports. Item 3. Audit Committee Financial Expert. Not applicable for semiannual reports. Item 4. Principal Accountant Fees and Services Not applicable for semiannual reports. Item 5. Audit Committee of Listed Registrants. Not applicable for semiannual reports. Item 6. Refer to Item 1. Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. Not applicable for semiannual reports. Item 8. Portfolio Managers of Closed-End Management Investment Companies Applicable only to reports filed by closed-end funds. Item 9. Closed-End Fund Repurchases Applicable to reports filed by closed-end funds. Item 10. Submission of Matters to a Vote of Security Holders Not applicable. Item 11. Controls and Procedures (a) The Fund's principal executive officer and principal financial officer have concluded that the Fund's disclosure controls and procedures are sufficient to ensure that information required to be disclosed by the Fund in this Form N-CSR was recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, based upon such officers' evaluation of these controls and procedures as of a date within 90 days of the filing date of the report. (b) There were no changes in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. Item 12. Exhibits (a) Code of Ethics - Not applicable for semiannual reports. (b) A separate certification for each principal executive officer and principal financial officer of the registrant are attached hereto as part of EX-99.CERT. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Active Assets Tax-Free Trust /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer February 15, 2008 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated. /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer February 15, 2008 /s/ Francis Smith Francis Smith Principal Financial Officer February 15, 2008 3 EX-99.CERT 2 y46376exv99wcert.txt CERTIFICATIONS EXHIBIT 12 B1 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER CERTIFICATIONS I, Ronald E. Robison, certify that: 1. I have reviewed this report on Form N-CSR of Active Assets Tax-Free Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 4 a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: February 15, 2008 /s/ Ronald E. Robison Ronald E. Robison Principal Executive Officer 5 EXHIBIT 12 B2 CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER CERTIFICATIONS I, Francis Smith, certify that: 1. I have reviewed this report on Form N-CSR of Active Assets Tax-Free Trust; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) and internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): 6 a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: February 15, 2008 /s/ Francis Smith Francis Smith Principal Financial Officer 7 EX-99.906CERT 3 y46376exv99w906cert.txt CERTIFICATIONS SECTION 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Active Assets Tax-Free Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended December 31, 2007 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: February 15, 2008 /s/ Ronald E. Robison ---------------------------------------- Ronald E. Robison Principal Executive Officer A signed original of this written statement required by Section 906 has been provided to Active Assets Tax-Free Trust and will be retained by Active Assets Tax-Free Trust and furnished to the Securities and Exchange Commission or its staff upon request. 8 SECTION 906 CERTIFICATION Certification Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Active Assets Tax-Free Trust In connection with the Report on Form N-CSR (the "Report") of the above-named issuer for the period ended December 31, 2007 that is accompanied by this certification, the undersigned hereby certifies that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Issuer. Date: February 15, 2008 /s/ Francis Smith ---------------------------------------- Francis Smith Principal Financial Officer A signed original of this written statement required by Section 906 has been provided to Active Assets Tax-Free Trust and will be retained by Active Assets Tax-Free Trust and furnished to the Securities and Exchange Commission or its staff upon request. 9 -----END PRIVACY-ENHANCED MESSAGE-----