TAX FREE INSTRUMENTS TRUST, 485BPOS, 1995-05-24

TAX FREE INSTRUMENTS TRUST
485BPOS, 1995-05-24

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1933 Act File No. 2-75122
1940 Act File No. 811-3337

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X

Pre-Effective Amendment No.

Post-Effective Amendment No. 25 X

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X

Amendment No. 20 X

TAX-FREE INSTRUMENTS TRUST

(Exact Name of Registrant as Specified in Charter)

Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779
(Address of Principal Executive Offices)

(412) 288-1900
(Registrant's Telephone Number)

John W. McGonigle, Esquire,
Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779
(Name and Address of Agent for Service)

It is proposed that this filing will become effective:

X immediately upon filing pursuant to paragraph (b)
on _________________ pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a) (i)
on pursuant to paragraph (a) (i).
75 days after filing pursuant to paragraph (a)(ii)
on _________________ pursuant to paragraph (a)(ii) of Rule 485.

If appropriate, check the following box:

This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

Registrant has filed with the Securities and Exchange Commission a
declaration pursuant to Rule 24f-2 under the Investment Company Act of
1940, and:

X filed the Notice required by that Rule on __May 15, 1995_________;
or
intends to file the Notice required by that Rule on or about
____________; or
during the most recent fiscal year did not sell any securities
pursuant to Rule 24f-2 under the Investment Company Act of 1940, and,
pursuant to Rule 24f-2(b)(2), need not file the Notice.

Copies To:

Matthew G. Maloney, Esquire
Dickstein, Shapiro & Morin, L.L.P.
2101 L Street, N.W.
Washington, D.C. 20037
CROSS-REFERENCE SHEET

This Amendment to the Registration Statement of TAX-FREE INSTRUMENTS
TRUST which is comprised of two classes of shares: (1) Investment Shares
and (2) Institutional Service Shares, relates to both classes of shares
and is comprised of the following:

PART A. INFORMATION REQUIRED IN A PROSPECTUS.

Prospectus Heading
(Rule 404(c) Cross Reference)

Item 1. Cover Page (1-2) Cover Page.
Item 2. Synopsis (1-2) Summary of Trust Expenses.
Item 3. Condensed Financial
Information (1-2) Financial Highlights.
Item 4. General Description of
Registrant. (1-2) Performance Information; (1-2)
General Information; (1) Liberty
Family of Funds; (1-2) Investment
Information; (1-2) Investment
Objective; (1-2) Investment
Policies; (1-2) Municipal
Securities; (1-2) Investment Risks;
(1-2) Investment Limitations; (1-2)
Regulatory Compliance; (1-2) Other
Classes of Shares.
Item 5. Management of the Fund (1-2) Trust Information; (1-2)
Management of the Trust; (1-2)
Distribution of Shares; (1-2)
Administration of the Trust.
Item 6. Capital Stock and Other
Securities (1-2) Dividends; (1-2) Capital
Gains; (1-2) Shareholder
Information; (1-2) Voting Rights; (1-
2) Massachusetts Partnership Law; (1-
2) Tax Information; (1-2) Federal
Income Tax; (1-2) State and Local
Taxes.
Item 7. Purchase of Securities Being
Offered (1-2) Net Asset Value; (1-2) How to
Purchase Shares; (1-2) Minimum
Investment Required; (1-2)
Certificates and Confirmations; (1)
Exchange Privilege; (1) Making an
Exchange.

Item 8. Redemption or Repurchase (1-2) How to Redeem Shares; (1)
Special Redemption Features; (1)
Contingent Deferred Sales Charge; (1-
2) Accounts With Low Balances.

Item 9. Pending Legal Proceedings None.

PART B. INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION.

Item 10. Cover Page (1-2) Cover Page.
Item 11. Table of Contents (1-2) Table of Contents.
Item 12. General Information and
History (1-2) General Information About the
Trust.
Item 13. Investment Objectives and
Policies (1-2) Investment Policies; (1-2)
Investment Limitations.
Item 14. Management of the Fund (1-2) Tax-Free Instruments Trust
Management.
Item 15. Control Persons and Principal
Holders of Securities (1-2) Share Ownership.
Item 16. Investment Advisory and Other
Services (1-2) Investment Advisory Services;
(1-2) Trust Administration; (1-2)
Shareholder Services Plan.
Item 17. Brokerage Allocation (1-2) Brokerage Transactions.
Item 18. Capital Stock and Other
Securities Not applicable.
Item 19. Purchase, Redemption and Pricing
of Securities Being Offered (1-2) Determining Net Asset Value;
(1-2) Redemption in Kind.
Item 20. Tax Status (1-2) The Trust's Tax Status.
Item 21. Underwriters See Part A. (1-2) Distribution of
Investment
Item 22. Calculations of Yield Quotations
of Money Market Funds (1-2) Performance Informantion; (1-
2) Yield; (1-2) Tax-Equivalent
Yield; (1-2) Effective Yield; (1-2)
Performance Comparisons.
Item 23. Financial Statements (1-2) Incorporated by reference to
the Annual Report of Registrant
dated March 31, 1995 (File No. 2-
75122 and File No. 811-3337).

TAX-FREE INSTRUMENTS TRUST
INVESTMENT SHARES
PROSPECTUS

The Investment Shares of Tax-Free Instruments Trust (the "Trust") offered by
this prospectus represent interests in an open-end, diversified management
investment company (a mutual fund), investing in short-term municipal securities
to achieve current income exempt from federal income tax consistent with
stability of principal and liquidity.

THE INVESTMENT SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR OBLIGATIONS
OF ANY BANK, ARE NOT ENDORSED OR 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 THESE
SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE
TRUST ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER INVESTMENT
SHARE; THERE CAN BE NO ASSURANCE THAT THE TRUST WILL BE ABLE TO DO SO.

This prospectus contains the information you should read and know before you
invest in Investment Shares of the Trust. Keep this prospectus for future
reference.

The Trust has also filed a Combined Statement of Additional Information dated
May 31, 1995, with the Securities and Exchange Commission. The information
contained in the Combined Statement of Additional Information is incorporated by
reference into this prospectus. You may request a copy of the Combined Statement
of Additional Information free of charge by calling 1-800-235-4669. To obtain
other information, or make inquiries about the Trust, contact your financial
institution.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

Prospectus dated May 31, 1995

------------------------------------- ---------------------------------------
TABLE OF CONTENTS

Summary of Trust Expenses......................................................1

Financial Highlights--Investment Shares........................................2

General Information............................................................3

Liberty Family of Funds........................................................3

Investment Information.........................................................5
Investment Objective.........................................................5
Investment Policies..........................................................5
Municipal Securities.........................................................7
Investment Risks.............................................................8
Investment Limitations.......................................................8
Regulatory Compliance........................................................8

Net Asset Value................................................................9

Trust Information..............................................................9
Management of the Trust......................................................9
Distribution of Shares......................................................10
Administration of the Trust.................................................11

How to Purchase Shares........................................................12
Minimum Investment Required.................................................12
Certificates and Confirmations..............................................12

Dividends...................................................................13
Capital Gains...............................................................13

Exchange Privilege............................................................13
Making an Exchange..........................................................14

How To Redeem Shares..........................................................14
Special Redemption Features.................................................16
Contingent Deferred Sales Charge............................................16
Accounts with Low Balances..................................................16

Shareholder Information.......................................................17
Voting Rights...............................................................17
Massachusetts Partnership Law...............................................17

Tax Information...............................................................18
Federal Income Tax..........................................................18
Pennsylvania Corporate and Personal
Property Taxes...........................................................18

Performance Information.......................................................19

Other Classes of Shares.......................................................19

------------------------------------- ---------------------------------------

SUMMARY OF TRUST EXPENSES
TAX-FREE INSTRUMENTS TRUST

<TABLE>
<S> <C> <C>
INVESTMENT SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases (as a percentage of offering price)................................... None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)......................................................................... None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable) (1)..................................................................... 0.00%
Redemption Fee (as a percentage of amount redeemed, if applicable)............................................ None
Exchange Fee.................................................................................................. None
ANNUAL INVESTMENT SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (2)............................................................................. 0.35%
12b-1 Fee..................................................................................................... None
Total Other Expenses.......................................................................................... 0.36%
Shareholder Services Fee (after waiver) (3).................................................... 0.15%
Total Investment Shares Operating Expenses (4)....................................................... 0.71%
</TABLE>

(1) Shareholders who purchase shares of funds in the Liberty Family of Funds
with proceeds of a redemption of shares of a mutual fund sold with a sales
load and not distributed by Federated Securities Corp., and subsequently
exchange into the Trust will be charged a contingent deferred sales charge
by the Trust's distributor of .50 of 1% for redemptions made within one year
of purchase based upon the terms and conditions applicable to the
redemption. See "Contingent Deferred Sales Charge" on page 16.

(2) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.50%.

(3) The maximum shareholder services fee is 0.25%.

(4) The total Investment Shares operating expenses in the table above are based
on expenses expected during the fiscal year ending March 31, 1996. The total
Investment Shares operating expenses were 0.70% for the fiscal year ended
March 31, 1995 and were 0.87% absent the voluntary waiver of a portion of
the management fee.

The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Investment Shares of the Trust
will bear, either directly or indirectly. For more complete descriptions of the
various costs and expenses, see "How to Purchase Shares" and "Trust
Information." Wire-transferred redemptions of less than $5,000 may be subject to
additional fees.

<TABLE>
<CAPTION>
EXAMPLE 1 year 3 years 5 years 10 years
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000 investment, assuming (1) 5%
annual return and (2) redemption at the end of each time period.............. $12 $23 $40 $88
You would pay the following expenses on the same investment, assuming no
redemption................................................................... $7 $23 $40 $88
</TABLE>

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

------------------------------------- ---------------------------------------

FINANCIAL HIGHLIGHTS--INVESTMENT SHARES
TAX-FREE INSTRUMENTS TRUST
--------------------------------------------------------------------------------

(FOR AN INVESTMENT SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

The following table has been audited by Arthur Andersen LLP, the Trust's
independent public accountants. Their report, dated May 12, 1995, on the Trust's
financial statements for the year ended March 31, 1995, and on the following
table for each of the periods presented, is included in the Annual Report, which
is incorporated herein by reference. This table should be read in conjunction
with the Trust's financial statements and notes thereto, which may be obtained
free of charge from the Trust.

<TABLE>
<CAPTION>
PERIOD ENDED MARCH 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
NET ASSET VALUE,
BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------------------
INCOME FROM
INVESTMENT
OPERATIONS
--------------------
Net investment
income 0.03 0.02 0.02 0.04 0.05 0.06 0.05 0.04 0.04 0.05
-------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
--------------------
Distributions from
net investment
income (0.03) (0.02) (0.02) (0.04) (0.05) (0.06) (0.05) (0.04) (0.04) (0.05)
-------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE,
END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------------- --------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN(A) 2.70% 2.01% 2.42% 3.84% 5.40% 5.88% 5.28% 4.29% 3.84% 4.79%
--------------------
RATIOS TO AVERAGE
NET ASSETS
--------------------
Expenses 0.70% 0.61% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55% 0.55%
--------------------
Net investment
income 2.66% 2.00% 2.38% 3.73% 5.25% 5.73% 5.14% 4.19% 3.74% 4.70%
--------------------
Expense waiver/
reimbursement(b) 0.17% 0.14% 0.10% 0.11% 0.12% 0.11% 0.08% 0.06% 0.06% 0.07%
--------------------
SUPPLEMENTAL DATA
--------------------
Net assets,
end of period
(000 omitted) $1,277,894 $1,327,506 $1,619,531 $1,440,970 $1,214,045 $1,142,022 $1,313,391 $1,552,460 $1,661,086 $1,225,138
--------------------
</TABLE>

(a) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.

(b) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.

--------------------------------------------------------------------------------
GENERAL INFORMATION

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 17, 1981. The Trust's address is Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779. The Declaration of Trust permits the
Trust to offer separate series of shares representing interests in separate
portfolios of securities. The shares in any one portfolio may be offered in
separate classes. With respect to the Trust, as of the date of this prospectus,
the Trustees have established two classes of shares known as Investment Shares
and Institutional Service Shares. This prospectus relates only to Investment
Shares of the Trust, which are designed primarily for individuals as a
convenient means of accumulating an interest in a professionally managed,
diversified portfolio investing primarily in short-term municipal securities.
The Trust may not be a suitable investment for retirement plans since it invests
in municipal securities. A minimum initial investment of $500 is required.

The Trust attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price. However, a contingent deferred sales
charge may be imposed under certain circumstances.

--------------------------------------------------------------------------------
LIBERTY FAMILY OF FUNDS

The Investment Shares of the Trust are a member of a family of mutual funds,
collectively known as the Liberty Family of Funds. The other funds in the
Liberty Family of Funds are:

.American Leaders Fund, Inc., providing growth of capital and income through
high-quality stocks;

.Capital Growth Fund, providing appreciation of capital primarily through equity
securities;

.Fund for U.S. Government Securities, Inc., providing current income through
long-term U.S. government securities;

.International Equity Fund, providing long-term capital growth and income
through international securities;

.International Income Fund, providing a high level of current income consistent
with prudent investment risk through high-quality debt securities denominated
primarily in foreign currencies;

.Liberty Equity Income Fund, Inc., providing above-average income and capital
appreciation through income producing equity securities;

.Liberty High Income Bond Fund, Inc., providing high current income through
high-yielding, lower-rated corporate bonds;

.Liberty Municipal Securities Fund, Inc., providing a high level of current
income exempt from federal regular income tax through municipal bonds;

.Liberty U.S. Government Money Market Trust, providing current income consistent
with stability of principal through high-quality U.S. government securities;

.Liberty Utility Fund, Inc., providing current income and long-term growth of
income, primarily through electric, gas, and communications utilities;

.Limited Term Fund, providing a high level of current income consistent with
minimum fluctuation in principal value through investment grade securities;

.Limited Term Municipal Fund, providing a high level of current income exempt
from federal regular income tax consistent with the preservation of principal,
primarily limited to municipal securities;

.Michigan Intermediate Municipal Trust, providing current income exempt from
federal regular income tax and the personal income taxes imposed by the state
of Michigan and Michigan municipalities, primarily through Michigan municipal
securities;

.Pennsylvania Municipal Income Fund, providing current income exempt from
federal regular income tax and the personal income taxes imposed by the
Commonwealth of Pennsylvania, primarily through Pennsylvania municipal
securities;

.Strategic Income Fund, providing a high level of current income, primarily
through domestic and foreign corporate debt obligations;

.World Utility Fund, providing total return primarily through securities issued
by domestic and foreign companies in the utilities industries.

Prospectuses for these funds are available by writing to Federated Securities
Corp.

Each of the funds may also invest in certain other types of securities as
described in each fund's prospectus.

The Liberty Family of Funds provides flexibility and diversification for an
investor's long-term investment planning. It enables an investor to meet the
challenges of changing market conditions by offering convenient exchange
privileges which give access to various investment vehicles and by providing the
investment services of proven, professional investment advisers.

Shareholders participating in The Liberty Account are designated Liberty Life
Members. Liberty Life Members are exempt from sales loads on future purchases in
and exchanges between any funds in the Liberty Family of Funds, as long as they
maintain a $500 balance in one of those funds.

--------------------------------------------------------------------------------
INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

The investment objective of the Trust is current income which is exempt from
federal income tax (including alternative minimum tax) consistent with stability
of principal. Interest income of the Trust that is exempt from federal income
tax retains its tax-free status when distributed to the Trust's shareholders. At
least 80% of the Trust's annual income will be exempt from federal income tax.
However, the interest from certain municipal securities is subject to federal
alternative minimum tax, and up to 20% of the Trust's income may be derived from
such securities.

The Trust pursues its investment objective by investing in a diversified
portfolio of municipal securities as defined below, with remaining maturities of
these securities, computed on a dollar-weighted basis, will be 90 days or less.
This investment objective cannot be changed without shareholder approval. While
there is no assurance that the Trust will achieve its investment objective, it
endeavors to do so by following the investment policies described in this
prospectus.

INVESTMENT POLICIES

ACCEPTABLE INVESTMENTS

The Trust invests primarily in debt obligations issued by or on behalf of
states, territories, and possessions of the United States, including the
District of Columbia, and any political subdivision or financing authority of
any of these, the income from which is, in the opinion of qualified legal
counsel, exempt from federal income tax ("Municipal Securities"). Examples of
Municipal Securities include, but are not limited to:

.tax and revenue anticipation notes ("TRANs") issued to finance working capital
needs in anticipation of receiving taxes or other revenues;

.bond anticipation notes ("BANs") that are intended to be refinanced through a
later issuance of longer-term bonds;

.municipal commercial paper and other short-term notes;

.variable rate demand notes;

.municipal bonds (including bonds having serial maturities and pre-refunded
bonds) and leases; and

.participation, trust, and partnership interests in any of the foregoing
obligations.

VARIABLE RATE DEMAND NOTES

Variable rate demand notes are long-term debt instruments that have variable or
floating interest rates and provide the Trust with the right to tender the
security for repurchase at its stated principal amount plus accrued interest.
Such securities typically bear interest at a rate that is intended to cause the
securities to trade at par. The interest rate may float or be adjusted at
regular intervals (ranging from daily to annually), and is normally based on a
published interest rate or interest rate index. Most variable rate demand notes
allow the Trust to demand the repurchase of the security on not more than seven
days prior notice. Other notes only permit the Trust to tender the security at
the time of each interest rate adjustment or at other fixed intervals. See
"Demand Features." The Trust treats variable rate demand notes as maturing on
the later of the date of the next interest rate adjustment or the date on which
the Trust may next tender the security for repurchase.

PARTICIPATION INTERESTS

The Trust may purchase interests in Municipal Securities from financial
institutions such as commercial and investment banks, savings and loan
associations, and insurance companies. These interests may take the form of
participations, beneficial interests in a trust, partnership interests or any
other form of indirect ownership that allows the Trust to treat the income from
the investment as exempt from federal income tax. The Trust invests in these
participation interests in order to obtain credit enhancement or demand features
that would not be available through direct ownership of the underlying Municipal
Securities.

MUNICIPAL LEASES

Municipal leases are obligations issued by state and local governments or
authorities to finance the acquisition of equipment and facilities. They may
take the form of a lease, an installment purchase contract, a conditional sales
contract, or a participation interest in any of the above.

RATINGS

The securities in which the Trust invests must be rated in one of the two
highest short-term rating categories by one or more nationally recognized
statistical rating organizations ("NRSROs") or be of comparable quality to
securities having such ratings. An NRSRO's two highest rating categories are
determined without regard for sub-categories and gradations. For example,
securities rated SP-1+, SP-1, or SP-2 by Standard & Poor's Ratings Group
("S&P"), MIG-1 or MIG-2 by Moody's Investors Service, Inc. ("Moody's"), or
FIN-1+, FIN-1, and FIN-2 by Fitch Investors Service, Inc. ("Fitch") are all
considered rated in one of the two highest short-term rating categories. The
Trust will follow applicable regulations in determining whether a security rated
by more than one NRSRO can be treated as being in one of the two highest
short-term rating categories; currently, such securities must be rated by two
NRSROs in one of their two highest rating categories. See "Regulatory
Compliance."

CREDIT ENHANCEMENT

Certain of the Trust's acceptable investments may be credit enhanced by a
guaranty, letter of credit, or insurance. The Trust typically evaluates the
credit quality and ratings of credit-enhanced securities based upon the
financial condition and ratings of the party providing the credit enhancement
(the "credit enhancer"), rather than the issuer. However, credit-enhanced
securities will not be treated as having been issued by the credit enhancer for
diversification purposes, unless the Trust has invested more than 10% of its
assets in securities issued, guaranteed or otherwise credit enhanced by the
credit enhancer, in which case the securities will be treated as having been
issued by both the issuer and the credit enhancer. The bankruptcy, receivership,
or default of the credit enhancer will adversely affect the quality and
marketability of the underlying security.

DEMAND FEATURES

The Trust may acquire securities that are subject to puts and standby
commitments ("demand features") to purchase the securities at their principal
amount (usually with accrued interest) within a fixed period (usually seven
days) following a demand by the Trust. The demand feature may be issued by the
issuer of the underlying securities, a dealer in the securities, or by another
third party, and may not be transferred separately from the underlying security.
The Trust uses these arrangements to provide the Trust with liquidity and not to
protect against changes in the market value of the underlying securities. The
bankruptcy, receivership, or default by the issuer of the demand feature, or a
default on the underlying security or other event that terminates the demand
feature before its exercise, will adversely affect the liquidity of the
underlying security. Demand features that are exercisable even after a payment
default on the underlying security may be treated as a form of credit
enhancement.

WHEN-ISSUED AND DELAYED
DELIVERY TRANSACTIONS

The Trust may purchase short-term municipal securities on a when-issued or
delayed delivery basis. These transactions are arrangements in which the Trust
purchases securities with payment and delivery scheduled for a future time. The
seller's failure to complete these transactions may cause the Trust to miss a
price or yield considered to be advantageous. Settlement dates may be a month or
more after entering into these transactions, and the market values of the
securities purchased may vary from the purchase prices. Accordingly, the Trust
may pay more or less than the market value of the securities on the settlement
date.

The Trust may dispose of a commitment prior to settlement if the adviser deems
it appropriate to do so. In addition, the Trust may enter into transactions to
sell its purchase commitments to third parties at current market values and
simultaneously acquire other commitments to purchase similar securities at later
dates. The Trust may realize short-term profits or losses upon the sale of such
commitments.

TEMPORARY INVESTMENTS

From time to time on a temporary basis when the investment adviser determines
that market conditions call for a temporary defensive posture, the Trust may
invest in short-term tax-exempt or taxable temporary investments. These
temporary investments include: obligations issued by or on behalf of municipal
or corporate issuers having the same quality characteristics as municipal
securities purchased by the Trust; marketable obligations issued or guaranteed
by the U.S. government, its agencies, or instrumentalities; repurchase
agreements (arrangements in which the organization selling the Trust a temporary
investment agrees at the time of sale to repurchase it at a mutually agreed upon
time and price); and prime commercial paper rated A-1 by S&P, Prime-1 by
Moody's, or F-1 by Fitch.

Although the Trust is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal income tax.

MUNICIPAL SECURITIES

Municipal Securities are generally issued to finance public works, such as
airports, bridges, highways, housing, hospitals, mass transportation projects,
schools, streets, and water and sewer works. They are also issued to repay
outstanding obligations, to raise funds for general operating expenses, and to
make loans to other public institutions and facilities.

Municipal Securities include industrial development bonds issued by or on behalf
of public authorities to provide financing aid to acquire sites or construct and
equip facilities for privately or publicly owned corporations. The availability
of this financing encourages these corporations to locate within the sponsoring
communities and thereby increases local employment.

The two principal classifications of Municipal Securities are "general
obligation" and "revenue" bonds. General obligation bonds are secured by the
issuer's pledge of its full faith and credit and taxing power for the payment of
principal and interest. Interest on and principal of revenue bonds, however, are
payable only from the revenue generated by the facility financed by the bond or
other specified sources of revenue. Revenue bonds do not represent a pledge of
credit or create any debt of or charge against the general revenues of a
municipality or public authority. Industrial development bonds are typically
classified as revenue bonds.

INVESTMENT RISKS

Yields on Municipal Securities depend on a variety of factors, including: the
general conditions of the short-term municipal note market and of the municipal
bond market; the size of the particular offering; the maturity of the
obligations; and the rating of the issue. The ability of the Trust to achieve
its investment objective also depends on the continuing ability of the issuers
of Municipal Securities and participation interests, or the credit enhancers of
either, to meet their obligations for the payment of interest and principal when
due. In addition, from time to time, the supply of Municipal Securities
acceptable for purchase by the Trust could become limited.

The Trust may invest in Municipal Securities which are repayable out of revenue
streams generated from economically related projects or facilities and/or whose
issuers are located in the same state. Sizable investments in these Municipal
Securities could involve an increased risk to the Trust should any of these
related projects or facilities experience financial difficulties.

Obligations of issuers of Municipal Securities are subject to the provisions of
bankruptcy, insolvency, and other laws affecting the rights and remedies of
creditors. In addition, the obligations of such issuers may become subject to
laws enacted in the future by Congress, state legislators, or referenda
extending the time for payment of principal and/or interest, or imposing other
constraints upon enforcement of such obligations or upon the ability of states
or municipalities to levy taxes. There is also the possibility that, as a result
of litigation or other conditions, the power or ability of any issuer to pay,
when due, the principal of and interest on its municipal securities may be
materially affected.

INVESTMENT LIMITATIONS

The Trust will not borrow money directly or through reverse repurchase
agreements (arrangements in which the Trust sells a money market instrument for
a percentage of its cash value with an agreement to buy it back on a set date)
or pledge securities except, under certain circumstances, the Trust may borrow
up to one-third of the value of its total assets and pledge up to 10% of the
value of total assets to secure such borrowings.

The Trust will not invest more than 10% of its net assets in illiquid
securities, including repurchase agreements maturing in more than seven days.

The above investment limitations cannot be changed without shareholder approval.

REGULATORY COMPLIANCE

The Trust may follow non-fundamental operational policies that are more
restrictive than its fundamental investment limitations, as set forth in this
prospectus and its Combined Statement of Additional Information, in order to
comply with applicable laws and regulations, including the provisions of and
regulations under the Investment Company Act of 1940, as amended. In particular,
the Trust will comply with the various requirements of Rule 2a-7, which
regulates money market mutual funds. The Trust will determine the effective
maturity of its investments, as well as its ability to consider a security as
having received the requisite short-term ratings by NRSROs, according to Rule
2a-7. The Trust may change these operational policies to reflect changes in the
laws and regulations without the approval of its shareholders.

--------------------------------------------------------------------------------
NET ASSET VALUE

The Trust attempts to stabilize the net asset value of shares at $1.00 by
valuing the portfolio securities using the amortized cost method. The net asset
value per share is determined by subtracting total liabilities from total assets
and dividing the remainder by the number of shares outstanding. The Trust cannot
guarantee that its net asset value will always remain at $1.00 per share.

The net asset value is determined at 12:00 noon, 3:00 p.m. (Eastern time), and
as of the close of trading (normally 4:00 p.m., Eastern time) on the New York
Stock Exchange each day the New York Stock Exchange is open.

--------------------------------------------------------------------------------
TRUST INFORMATION

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES

The Trust is managed by a Board of Trustees. The Trustees are responsible for
managing the Trust's business affairs and for exercising all the Trust's powers
except those reserved for the shareholders. An Executive Committee of the Board
of Trustees handles the Board's responsibilities between meetings of the Board.

LIABILITY OF TRUSTEES

Under the Trust's Declaration of Trust, the Trustees will not be liable for
errors of judgment or mistakes of fact or law. However, they are not protected
against any liability to which they would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of their office.

INVESTMENT ADVISER

Investment decisions for the Trust are made by Federated Management, the Trust's
investment adviser, subject to direction by the Trustees. The adviser's address
is Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779. The adviser
continually conducts investment research and supervision for the Trust and is
responsible for the purchase and sale of portfolio instruments.

ADVISORY FEES

The adviser receives an annual investment advisory fee equal to .50 of 1% of the
Trust's average daily net assets. The adviser has undertaken to reimburse the
Trust up to the amount of the advisory fee for operating expenses in excess of
limitations established by certain states. The adviser also may voluntarily
choose to waive a portion of its fee or reimburse other expenses of the Trust,
but reserves the right to terminate such waiver or reimbursement at any time at
its sole discretion.

ADVISER'S BACKGROUND

Federated Management, a Delaware business trust, organized on April 11, 1989, is
a registered investment adviser under the Investment Advisers Act of 1940. It is
a subsidiary of Federated Investors. All of the Class A (voting) shares of
Federated Investors are owned by a trust, the trustees of which are John F.
Donahue, Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and
Mr. Donahue's son, J. Christopher Donahue, who is President and Trustee of
Federated Investors.

Federated Management and other subsidiaries of Federated Investors serve as
investment advisers to a number of investment companies and private accounts.
Certain other subsidiaries also provide administrative services to a number of
investment companies. With over $72 billion invested across more than 260 funds
under management and/or administration by its subsidiaries, as of December 31,
1994, Federated Investors is one of the largest mutual fund investment managers
in the United States. With more than 1,750 employees, Federated continues to be
led by the management who founded the company in 1955. Federated funds are
presently at work in and through 4,000 financial institutions nationwide. More
than 100,000 investment professionals have selected Federated funds for their
clients.

DISTRIBUTION OF SHARES

Federated Securities Corp. is the principal distributor for shares of the Trust.
Federated Securities Corp. is located at Federated Investors Tower, Pittsburgh,
Pennsylvania 15222-3779. It is a Pennsylvania corporation organized on November
14, 1969, and is the principal distributor for a number of investment companies.
Federated Securities Corp. is a subsidiary of Federated Investors.

SHAREHOLDER SERVICES PLAN

The Trust has adopted a Shareholder Services Plan (the "Services Plan") under
which it will pay Federated Shareholder Services, a subsidiary of Federated
Investors, an amount not exceeding 0.25 of 1% of the average daily net asset
value of the shares to provide personal services and/or maintenance of
shareholder accounts to the Trust and its shareholders. From time to time and
for such periods as deemed appropriate, the amount stated above may be reduced
voluntarily.

Federated Shareholder Services may elect to pay financial institutions fees
based upon shares owned by their clients or customers for services provided to
those clients or customers. The schedules of such fees and the basis upon which
such fees will be paid will be determined from time to time by Federated
Shareholder Services.

State securities laws may require certain financial institutions such as
depository institutions to register as dealers.

OTHER PAYMENTS TO
FINANCIAL INSTITUTIONS

In addition to periodic payments to financial institutions under the Shareholder
Services Plan, certain financial institutions may be compensated by the adviser
or its affiliates for the continuing investment of customers' assets in certain
funds, including the Trust, advised by those entities. These payments will be
made directly by the distributor or adviser from their assets, and will not be
made from the assets of the Trust or by the assessment of a sales charge on
Investment Shares.

ADMINISTRATION OF THE TRUST

ADMINISTRATIVE SERVICES

Federated Administrative Services, a subsidiary of Federated Investors, provides
administrative personnel and services (including certain legal and financial
reporting services) necessary to operate the Trust. Federated Administrative
Services provides these at an annual rate as specified below:

<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of
$750 million
</TABLE>

The administrative fee received during any fiscal year shall be at least
$125,000 per portfolio and $30,000 per each additional class of shares. Average
aggregate daily net assets include those of all mutual funds advised by
affiliates of Federated Investors. Federated Administrative Services may choose
voluntarily to waive a portion of its fee.

CUSTODIAN

State Street Bank and Trust Company, P.O. Box 8600, Boston, Massachusetts,
02266-8600, is custodian for the securities and cash of the Trust.

TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT

Federated Services Company, P.O. Box 8600, Boston, Massachusetts 02266-8600, is
transfer agent for the shares of, and dividend disbursing agent for, the Trust.
Federated Services Company is a subsidiary of Federated Investors.

INDEPENDENT PUBLIC ACCOUNTANTS

The independent public accountants for the Trust are Arthur Andersen LLP, 2100
One PPG Place, Pittsburgh, Pennsylvania 15222.

--------------------------------------------------------------------------------
HOW TO PURCHASE SHARES

Shares are sold at their net asset value, without a sales load, next determined
after an order is received, on days on which the New York Stock Exchange and the
Federal Reserve Wire System are open for business. Shares may be purchased as
described below. Accounts may be opened through a financial institution (such as
a bank or broker/dealer) or by completing, signing, and returning the new
account form available from the Trust. In connection with any sale, Federated
Securities Corp. may from time to time offer certain items of nominal value to
any shareholder or investor. The Trust reserves the right to reject any purchase
request.

THROUGH A FINANCIAL INSTITUTION

Investors may call their financial institutions, which have sales agreements
with the distributor, to place a purchase order. Orders through a financial
institution are considered received when the Trust receives payment by wire or
converts payment by check from the financial institution into federal funds. It
is the financial institution's responsibility to transmit orders promptly. Texas
residents must place purchase orders directly through the distributor. Financial
institutions may charge additional fees for their services.

BY WIRE

To purchase by wire, call the Trust before 3:00 p.m. (Eastern time) to place an
order. All information needed will be taken over the telephone, and the order is
considered received immediately. Payment by federal funds must be received
before 3 p.m. (Eastern time) that same day. Federal funds should be wired as
follows: Federated Services Company, c/o State Street Bank and Trust Company,
Boston, MA; Attention; EDGEWIRE; For Credit to: Tax-Free Instruments
Trust--Investment Shares; Fund Number (this number can be found on the account
statement or by contacting the Trust) Group Number or Order Number; Nominee or
Institution Name; and ABA Number 011000028.

BY MAIL

To purchase by mail, send a check made payable to Tax-Free Instruments
Trust--Investment Shares to: Federated Services Company, P.O. Box 8600, Boston,
MA 02266-8600. Orders by mail are considered received when payment by check is
converted into federal funds. This is normally the next business day after the
check is received.

SYSTEMATIC INVESTMENT PROGRAM

Under this program, funds in a minimum of $100 are automatically withdrawn
periodically from the shareholder's checking account at any Automated Clearing
House member institution and invested in Trust shares.

Shareholders should contact their financial institution and/or the Trust to
participate in this program.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment is $500. Minimum subsequent investments must be
$100.

CERTIFICATES AND CONFIRMATIONS

As transfer agent for the Trust, Federated Services Company maintains a share
account for each shareholder. Share certificates are not issued unless requested
by contacting the Trust or Federated Services Company in writing.

Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.

DIVIDENDS

Dividends are declared daily and paid monthly. Dividends are automatically
reinvested on payment dates in additional shares of the Trust unless cash
payments are requested by writing to the Trust. Shares purchased by wire before
3:00 p.m. (Eastern time) begin earning dividends that day. Shares purchased by
check begin earning dividends the day after the check is converted into federal
funds.

CAPITAL GAINS

The Trust does not expect to realize any capital gains or losses. If capital
gains or losses were to occur, they could result in an increase or decrease in
dividends. The Trust will distribute in cash or additional shares any realized
net long-term capital gains at least once every 12 months.

-------------------------------------------------------------------------------
EXCHANGE PRIVILEGE

Investment Shares may be acquired in exchange for shares of other mutual funds
in the Liberty Family of Funds at net asset value plus the difference between
the Trust's sales load already paid and any sales load of the fund into which
the Investment Shares are to be exchanged, if higher. No additional fees are
imposed on exchanges. This privilege is available to shareholders resident in
any state in which the fund shares being acquired may be sold.

Shareholders using this privilege must exchange Investment Shares having a net
asset value equal to the value of the minimum investment required of the fund
into which the Investments Shares are to be exchanged. Before the exchange, the
shareholder must receive a prospectus for the fund for which the exchange is
being made. Upon receipt of proper instructions and required supporting
documents, Investment Shares submitted for exchange are redeemed, and the
proceeds invested in shares of the other fund. The Trust reserves the right to
reject any exchange. The exchange privilege may be terminated or modified at any
time. Shareholders will be notified of the termination or modification of the
exchange privilege.

An exercise of the exchange privilege is treated as a sale for federal income
tax purposes. Depending on the circumstances, a short-term or long-term capital
gain or loss may be realized.

For further information on the exchange privilege and to obtain prospectuses for
the Liberty Family of Funds or certain Federated Funds, contact the Trust.

MAKING AN EXCHANGE

Instructions for exchanges for the Liberty Family of Funds may be given in
writing or by telephone. Written instructions may require a signature guarantee.
Shareholders of the Trust may have difficulty in making exchanges by telephone
through brokers and other financial institutions during times of drastic
economic or market changes. If a shareholder cannot contact his broker or
financial institution by telephone, it is recommended that an exchange request
be made in writing and sent by overnight mail to Federated Services Company, 500
Victory Road--2nd Floor, Quincy, Massachusetts 02171.

TELEPHONE INSTRUCTIONS

Before an exchange can be made by telephone, a properly executed authorization
form must be completed and on file with Federated Services Company. Shares may
be exchanged between two funds only if they have identical shareholder
registrations. If reasonable procedures are not followed by the Trust, it may be
liable for losses due to unauthorized or fraudulent telephone instructions.

Any shares held in certificate form cannot be exchanged by telephone but must be
forwarded to Federated Services Company, P.O. Box 8600, Boston, Massachusetts
02266-8600 and deposited to the shareholder's account before being exchanged.
Telephone instructions will be processed as of 4:00 p.m. (Eastern time) and must
be received by the Trust before that time for shares to be exchanged the same
day. Shareholders exchanging into a fund will begin receiving dividends the
following business day. This privilege may be modified or terminated at any
time.

--------------------------------------------------------------------------------
HOW TO REDEEM SHARES

Shares are redeemed at their net asset value next determined after Federated
Services Company receives the redemption request. Redemptions will be made on
days on which the Trust computes its net asset value. Redemption requests must
be received in proper form and can be made as described below.

REDEEMING SHARES THROUGH A
FINANCIAL INSTITUTION

Shares may be redeemed by calling the shareholder's financial institution.
Shares will be redeemed at the net asset value next determined after the Trust
receives the redemption request from the financial institution. The financial
institution is responsible for promptly submitting redemption requests and
providing proper written redemption instructions. The financial institution may
charge customary fees and commissions for this service.

An authorization form permitting redemption requests by telephone must first be
completed. Authorization forms and information on this service are available
from Federated Securities Corp.

In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If this occurs, another method of
redemption, such as "Redeeming Shares By Mail", should be considered.

REDEEMING SHARES BY TELEPHONE

fraudulent telephone instructions. An authorization form permitting the Trust to
accept telephone requests must first be completed. Authorization forms and
information on this service are available from Federated Securities Corp.

If the redemption request is received before 3:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after 3:00
p.m. (Eastern time). However, the proceeds are not wired until the following
business day.

In the event of drastic economic or market changes, a shareholder may experience
difficulty in redeeming by telephone. If such a case should occur, another
method of redemption, such as "Redeeming Shares By Mail", should be considered.
If at any time the Trust shall determine it necessary to terminate or modify
this method of redemption, shareholders would be promptly notified.

REDEEMING SHARES BY MAIL

Shares may be redeemed by sending a written request to: Federated Services
Company, P.O. Box 8600, Boston, MA 02266-8600. The written request should state:
Tax-Free Instruments Trust--Investment Shares; shareholder's name; the account
number; and the share or dollar amount requested. Sign the request exactly as
the shares are registered. Shareholders should call the Trust for assistance in
redeeming by mail.

If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.

Shareholders requesting a redemption of $50,000 or more, a redemption of any
amount to be sent to an address other than that on record with the Trust, or a
redemption payable other than to the shareholder of record must have their
signatures guaranteed by:

.a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");

.a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;

.a savings bank or savings and loan association whose deposits are insured by
the Savings Association Insurance Fund, which is administered by the FDIC; or

.any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.

The Trust does not accept signatures guaranteed by a notary public.

The Trust and the transfer agent have adopted standards for accepting signature
guarantees from the above institutions. The Trust may elect in the future to
limit eligible signature guarantors to institutions that are members of the
signature guarantee program. The Trust and its transfer agent reserve the right
to amend these standards at any time without notice.

Normally, a check for the proceeds is mailed within one business day, but in no
event more than seven days, after receipt of a proper written redemption
request. Dividends are paid up to and including the day that a redemption
request is processed.

BY WRITING A CHECK

At the shareholder's request, Federated Services Company will establish a
checking account for redeeming shares. The cost for providing and processing
checks will be $10.00. Annual Liberty Life Members shall not be subject to such
fee. For further information, contact the Trust.

With this checking account, shares may be redeemed by writing a check for
$100.00 or more. The redemption will be made at the net asset value on the date
that the check is presented to the Trust. A check may not be written to close an
account. A shareholder may obtain cash by negotiating the check through the
shareholder's local bank. Checks should never be made payable or sent to State
Street Bank and Trust Company or Federated Services Company to redeem shares.
Canceled checks are sent to the shareholder each month.

SPECIAL REDEMPTION FEATURES

SYSTEMATIC WITHDRAWAL PROGRAM

If a shareholder's account has a value of at least $10,000, a systematic
withdrawal program may be established whereby automatic redemptions are made
from the account and transferred electronically to any commercial bank, savings
bank, or credit union that is an Automated Clearing House member. Shareholders
may apply for participation in this program through their financial institution.

CONTINGENT DEFERRED SALES CHARGE

Shareholders who purchase shares of funds in the Liberty Family of Funds with
proceeds of a redemption of shares of a mutual fund sold with a sales load and
not distributed by Federated Securities Corp., and subsequently exchange into
the Trust, will be charged a contingent deferred sales charge by the Trust's
distributor of .50 of 1% for redemptions made within one year of purchase based
upon the terms and conditions applicable to the redemption.

The contingent deferred sales charge will not be imposed in connection with
redemptions by the Trust of accounts with low balances or when a redemption
results from a return under the following circumstances: (i) a total or partial
distribution from a qualified plan, other than an IRA, Keogh Plan, or a
custodial account, following retirement; (ii) a total or partial distribution
from an IRA, Keogh Plan, or a custodial account, after the beneficial owner
attains age 70-1/2; or (iii) from the death or disability of the beneficial
owner. The exemption from the contingent deferred sales charge for qualified
plans, an IRA, Keogh Plan or custodial account does not extend to account
transfers, rollovers, and other redemptions made for purposes of reinvestment.

ACCOUNTS WITH LOW BALANCES

Due to the high cost of maintaining accounts with low balances, the Trust may
redeem shares in any account, except accounts maintained by retirement plans,
and pay the proceeds to the shareholder if the account balance falls below a
required minimum value of $500 due to shareholder redemptions.

Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.

This policy does not currently apply to IRAs, Koeghs, or other retirement
accounts. These types of accounts may be subject to the fund-required minimum in
the future. The shares may be redeemed and placed in a non-interest bearing
brokerage account without prior written notification.

--------------------------------------------------------------------------------
SHAREHOLDER INFORMATION

VOTING RIGHTS

Each share of the Trust gives the shareholder one vote in Trustee elections and
other matters submitted to shareholders for vote. All shares of all classes of
each portfolio in the Trust have equal voting rights, except that in matters
affecting only a particular portfolio or class, only shares of that portfolio or
class are entitled to vote. As a Massachusetts business trust, the Trust is not
required to hold annual shareholder meetings. Shareholder approval will be
sought only for certain changes in the Trust's operation and for the election of
Trustees under certain circumstances.

Trustees may be removed by the Trustees or by shareholders at a special meeting.
A special meeting of the shareholders for this purpose shall be called by the
Trustees upon the written request of shareholders owning at least 10% of the
outstanding shares of the Trust.

MASSACHUSETTS PARTNERSHIP LAW

Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Trust has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Trust. These documents require notice of this disclaimer to be given in each
agreement, obligation, or instrument the Trust or its Trustees enter into or
sign.

In the unlikely event a shareholder is held personally liable for the Trust's
obligations, the Trust is required by the Declaration of Trust to use its
property to protect or compensate the shareholder. On request, the Trust will
defend any claim made and pay any judgment against a shareholder for any act or
obligation of the Trust. Therefore, financial loss resulting from liability as a
shareholder will occur only if the Trust itself cannot meet its obligations to
indemnify shareholders and pay judgments against them.

--------------------------------------------------------------------------------
TAX INFORMATION

FEDERAL INCOME TAX

The Trust will pay no federal income tax because it expects to meet requirements
of the Internal Revenue Code applicable to regulated investment companies and to
receive the special tax treatment afforded to such companies.

Shareholders are not required to pay the federal regular income tax on any
dividends received from the Trust that represent net interest on tax-exempt
municipal bonds. However, under the Tax Reform Act of 1986, dividends
representing net interest earned on certain "private activity" bonds issued
after August 7, 1986, may be included in calculating the federal individual
alternative minimum tax or the federal alternative minimum tax for corporations.
The Trust may purchase all types of municipal bonds, including private activity
bonds. Should the Trust purchase any such bonds, a portion of the Trust's
dividends may be treated as a tax preference item.

The alternative minimum tax applies when it exceeds the regular tax for the
taxable year. Alternative minimum taxable income is equal to the regular taxable
income of the taxpayer increased by certain "tax preference" items not included
in regular taxable income and reduced by only a portion of the deductions
allowed in the calculation of the regular tax.

Dividends of the Trust representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.

These tax consequences apply whether dividends are received in cash or as
additional shares.

PENNSYLVANIA CORPORATE AND
PERSONAL PROPERTY TAXES

In the opinion of Houston, Houston & Donnelly, counsel to the Trust:

.the Trust is not subject to Pennsylvania corporate or personal property taxes;
and

.Trust shares may be subject to personal property taxes imposed by counties,
municipalities, and school districts in Pennsylvania to the extent that the
portfolio securities in the Trust would be subject to such taxes if owned
directly by residents of those jurisdictions.

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

--------------------------------------------------------------------------------
PERFORMANCE INFORMATION

From time to time, the Trust advertises its yield, effective yield, and
tax-equivalent yield for Investment Shares.

Yield represents the annualized rate of income earned on an investment over a
seven-day period. It is the annualized dividends earned during the period on an
investment shown as a percentage of the investment. The effective yield is
calculated similarly to the yield, but when annualized, the income earned by an
investment is assumed to be reinvested daily. The effective yield will be
slightly higher than the yield because of the compounding effect of this assumed
reinvestment. The tax-equivalent yield is calculated similarly to the yield, but
is adjusted to reflect the taxable yield that would have to be earned to equal
the shares' tax-exempt yield, assuming a specific tax rate.

Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.

From time to time, advertisements for the Trust may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Trust's performance to certain indices.

--------------------------------------------------------------------------------
OTHER CLASSES OF SHARES

The Trust also offers another class of shares called Institutional Service
Shares. Institutional Service Shares are sold at net asset value primarily to
financial institutions and are subject to a minimum initial investment of
$25,000.

Investment Shares and Institutional Service Shares are subject to certain of the
same expenses; however, Institutional Service Shares are subject to a
Shareholder Services Plan. Expense differences between Investment Shares and
Institutional Service Shares may affect the performance of each class.

To obtain more information and a prospectus for Institutional Service Shares,
investors may call 1-800-235-4699 or contact their financial institution.

TAX-FREE
INSTRUMENTS TRUST
INVESTMENT SHARES
PROSPECTUS

An Open-End, Diversified, Management
Investment Company

Prospectus dated May 31, 1995

[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779
876924101
8062810A-IV (5/95)

TAX-FREE INSTRUMENTS TRUST
INSTITUTIONAL SERVICE SHARES
PROSPECTUS

The Institutional Service Shares of Tax-Free Instruments Trust (the "Trust")
offered by this prospectus represent interests in an open-end, diversified
management investment company (a mutual fund), investing in short-term municipal
securities to achieve current income exempt from federal income tax consistent
with stability of principal.

THE INSTITUTIONAL SERVICE SHARES OFFERED BY THIS PROSPECTUS ARE NOT DEPOSITS OR
OBLIGATIONS OF ANY BANK, ARE NOT ENDORSED OR 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 THESE SHARES INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL. THE TRUST ATTEMPTS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER
INSTITUTIONAL SERVICE SHARES; THERE CAN BE NO ASSURANCE THAT THE TRUST WILL BE
ABLE TO DO SO.

This prospectus contains the information you should read and know before you
invest in Institutional Service Shares of the Trust. Keep this prospectus for
future reference.

Prospectus dated May 31, 1995

------------------------------------- --------------------------------------

TABLE OF CONTENTS

Summary of Trust Expenses......................................................1

Financial Highlights--Institutional Service
Shares.......................................................................2

General Information............................................................3

Investment Information.........................................................3
Investment Objective.........................................................3
Investment Policies..........................................................3
Municipal Securities.........................................................6
Investment Risks.............................................................6
Investment Limitations.......................................................7
Regulatory Compliance........................................................7

Net Asset Value................................................................7

Trust Information..............................................................8
Management of the Trust......................................................8
Distribution of Shares.......................................................8
Administration of the Trust..................................................9

How To Purchase Shares........................................................10
Minimum Investment Required.................................................11
Certificates and Confirmations..............................................11
Dividends...................................................................11
Capital Gains...............................................................11

How to Redeem Shares..........................................................11
Accounts with Low Balances..................................................12

Shareholder Information.......................................................13
Voting Rights...............................................................13
Massachusetts Partnership Law...............................................13

Tax Information...............................................................14
Federal Income Tax..........................................................14
Pennsylvania Corporate and Personal
Property Taxes...........................................................14

Performance Information.......................................................15

Other Classes of Shares.......................................................15

------------------------------------- --------------------------------------

SUMMARY OF TRUST EXPENSES
TAX-FREE INSTRUMENTS TRUST

<TABLE>
<S> <C> <C>
INSTITUTIONAL SERVICE SHARES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases
(as a percentage of offering price)........................................................................ None
Maximum Sales Load Imposed on Reinvested Dividends
(as a percentage of offering price)........................................................................ None
Contingent Deferred Sales Charge (as a percentage of original purchase price or
redemption proceeds, as applicable)........................................................................ None
Redemption Fee (as a percentage of amount redeemed, if applicable)........................................... None
Exchange Fee................................................................................................. None
ANNUAL INSTITUTIONAL SERVICE SHARES OPERATING EXPENSES
(As a percentage of average net assets)
Management Fee (after waiver) (1)............................................................................ 0.35%
12b-1 Fee.................................................................................................... None
Total Other Expenses......................................................................................... 0.21%
Shareholder Services Fee (after waiver) (2).................................................. 0.00%
Total Institutional Service Shares Operating Expenses (3).......................................... 0.56%
</TABLE>

(1) The management fee has been reduced to reflect the voluntary waiver of a
portion of the management fee. The adviser can terminate this voluntary
waiver at any time at its sole discretion. The maximum management fee is
0.50%

(2) The maximum shareholder services fee is 0.25%.

(3) The total Institutional Service Shares operating expenses in the table
above are based on expenses expected during the fiscal year ending March
31, 1996. The total Institutional Service Shares operating expenses were
0.55% for the fiscal year ended March 31, 1995, and were 0.72% absent the
voluntary waiver of a portion of the management fee.

The purpose of this table is to assist an investor in understanding the
various costs and expenses that a shareholder of Institutional Service Shares of
the Trust will bear, either directly or indirectly. For more complete
descriptions of the various costs and expenses, see "How to Purchase Shares" and
"Trust Information." Wire-transferred redemptions of less than $5,000 may be
subject to additional fees.

THE ABOVE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR
FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

------------------------------------- --------------------------------------

FINANCIAL HIGHLIGHTS--INSTITUTIONAL SERVICE SHARES
TAX-FREE INSTRUMENTS TRUST
--------------------------------------------------------------------------------

(FOR AN INSTITUTIONAL SERVICE SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
PERIOD ENDED
MARCH 31,
---------------------
<S> <C> <C>
1995 1994(A)
--------- ---------
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00
---------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
---------------------------------------------------------------------------------------------
Net investment income 0.03 0.01
--------------------------------------------------------------------------------------------- --------- -----------
LESS DISTRIBUTIONS
---------------------------------------------------------------------------------------------
Distributions from net investment income (0.03) (0.01)
--------------------------------------------------------------------------------------------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00
--------------------------------------------------------------------------------------------- --------- -----------
TOTAL RETURN(B) 2.85% 0.92%
---------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
---------------------------------------------------------------------------------------------
Expenses 0.55% 0.55%(c)
---------------------------------------------------------------------------------------------
Net investment income 2.82% 1.99%(c)
---------------------------------------------------------------------------------------------
Expense waiver/reimbursement (d) 0.17% 0.14%(c)
---------------------------------------------------------------------------------------------
SUPPLEMENTAL DATA
---------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $358,826 $390,453
---------------------------------------------------------------------------------------------
</TABLE>

(a) Reflects operations for the period from October 15, 1993 (date of initial
public investment) to
March 31, 1994.

(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.

(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.

--------------------------------------------------------------------------------

GENERAL INFORMATION

The Trust was established as a Massachusetts business trust under a Declaration
of Trust dated November 17, 1981. The Trust's address is Federated Investors
Tower, Pittsburgh, Pennsylvania 15222-3779. The Declaration of Trust permits the
Trust to offer separate series of shares representing interests in separate
portfolios of securities. The shares in any one portfolio may be offered in
separate classes. With respect to the Trust, as of the date of this prospectus,
the Trustees have established two classes of shares known as Institutional
Service Shares and Investment Shares. This prospectus relates only to
Institutional Service Shares of the Trust, which are designed primarily for
individuals, institutions, and fiduciaries as a convenient means of accumulating
an interest in a professionally managed, diversified portfolio investing
primarily in short-term municipal securities. The Trust may not be a suitable
investment for retirement plans since it invests in municipal securities. A
minimum initial investment of $25,000 is required.

The Trust attempts to stabilize the value of a share at $1.00. Shares are
currently sold and redeemed at that price.

--------------------------------------------------------------------------------

INVESTMENT INFORMATION

INVESTMENT OBJECTIVE

INVESTMENT POLICIES

ACCEPTABLE INVESTMENTS

.tax and revenue anticipation notes ("TRANs") issued to finance working capital
needs in anticipation of receiving taxes or other revenues;

.bond anticipation notes ("BANs") that are intended to be refinanced through a
later issuance of longer-term bonds;

.municipal commercial paper and other short-term notes;

.variable rate demand notes;

.municipal bonds (including bonds having serial maturities and pre-refunded
bonds) and leases; and

.participation, trust, and partnership interests in any of the foregoing
obligations.

VARIABLE RATE DEMAND NOTES

PARTICIPATION INTERESTS

MUNICIPAL LEASES

RATINGS

The securities in which the Trust invests must be rated in one of the two
highest short-term rating categories by one or more nationally
recognized statistical rating organizations ("NRSROs") or be of comparable
quality to securities having such ratings. An NRSRO's two highest rating
categories are determined without regard for sub-categories and gradations. For
example, securities rated SP-1+, SP-1, or
SP-2 by Standard & Poor's Ratings Group ("S&P"), MIG-1 or MIG-2 by Moody's
Investors Service, Inc. ("Moody's"), or FIN-1+, FIN-1, and FIN-2 by Fitch
Investors Service, Inc. ("Fitch") are all considered rated in one of the two
highest short-term rating categories. The Trust will follow applicable
regulations in determining whether a security rated by more than one NRSRO can
be treated as being in one of the two highest short-term rating categories;
currently, such securities must be rated by two NRSROs in one of their two
highest rating categories. See "Regulatory Compliance."

CREDIT ENHANCEMENT

DEMAND FEATURES

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

TEMPORARY INVESTMENTS

Although the Trust is permitted to make taxable, temporary investments, there is
no current intention of generating income subject to federal income tax.

MUNICIPAL SECURITIES

INVESTMENT RISKS

INVESTMENT LIMITATIONS

The Trust will not invest more than 10% of its net assets in illiquid
securities, including repurchase agreements maturing in more than seven days.

The above investment limitations cannot be changed without shareholder approval.

REGULATORY COMPLIANCE

-------------------------------------------------------------------------------
NET ASSET VALUE

--------------------------------------------------------------------------------
TRUST INFORMATION

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES

LIABILITY OF TRUSTEES

INVESTMENT ADVISER

ADVISORY FEES

ADVISER'S BACKGROUND

Federated Management, a Delaware business trust, organized on April 11, 1989 is
a registered investment adviser under the Investment Advisers Act of 1940. It is
a subsidiary of Federated Investors. All of the Class A (voting) shares of
Federated Investors are owned by a trust, the trustees of which are John F.
Donahue, Chairman and Trustee of Federated Investors, Mr. Donahue's wife, and
Mr. Donahue's son, J. Christopher Donahue, who is President and Trustee of
Federated Investors.

DISTRIBUTION OF SHARES

SHAREHOLDER SERVICES PLAN

State securities laws may require certain financial institutions such as
depository institutions to register as dealers.

OTHER PAYMENTS TO FINANCIAL INSTITUTIONS

ADMINISTRATION OF THE TRUST

ADMINISTRATIVE SERVICES

<TABLE>
<CAPTION>
AVERAGE AGGREGATE
MAXIMUM FEE DAILY NET ASSETS
----------- -------------------------
<C> <S>
.15 of 1% on the first $250 million
.125 of 1% on the next $250 million
.10 of 1% on the next $250 million
.075 of 1% on assets in excess of
$750 million
</TABLE>

CUSTODIAN

State Street Bank and Trust Company, P.O. Box 8600, Boston, Massachusetts
02266-8600, is custodian for the securities and cash of the Trust.

TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT

INDEPENDENT PUBLIC ACCOUNTANTS

The independent public accountants for the Trust are Arthur Andersen LLP, 2100
One PPG Place, Pittsburgh, Pennsylvania 15222.

--------------------------------------------------------------------------------
HOW TO PURCHASE SHARES

To make a purchase, open an account by calling Federated Securities Corp.
Information needed to establish the account will be taken by telephone.

BY WIRE

To purchase by Federal Reserve wire, call the Trust before 3:00 p.m. (Eastern
time) to place an order. The order is considered received immediately. Payment
by federal funds must be received before 3:00 p.m. (Eastern time) that day.
Federal funds should be wired as follows: Federated Services Company, c/o State
Street Bank and Trust Company, Boston, MA; Attention: EDGEWIRE; For Credit to:
Tax-Free Instruments Trust--Institutional Service Shares; Fund Number (this
number can be found on the account statement or by contacting the Trust); Group
Number or Order Number; Nominee or Institution Name; and ABA Number 011000028.

BY MAIL

To purchase by mail, send a check made payable to Tax-Free Instruments
Trust--Institutional Service Shares to: Federated Services Company, P.O. Box
8600, Boston, MA 02266-8600. Orders by mail are considered received when payment
by check is converted into federal funds. This is normally the next business day
after the check is received.

MINIMUM INVESTMENT REQUIRED

The minimum initial investment is $25,000. There is no minimum for subsequent
investments.

CERTIFICATES AND CONFIRMATIONS

Monthly confirmations are sent to report transactions such as all purchases and
redemptions as well as dividends paid during the month.

DIVIDENDS

CAPITAL GAINS

--------------------------------------------------------------------------------
HOW TO REDEEM SHARES

REDEEMING SHARES BY MAIL

Shares may be redeemed by sending a written request to: Federated Services
Company, P.O. Box 8600, Boston, MA 02266-8600. The written request should state:
Tax-Free Instruments Trust--Institutional Service Shares; shareholder's name;
the account number; and the share or dollar amount requested. Sign the request
exactly as the shares are registered. Shareholders should call the Trust for
assistance in redeeming by mail.

If share certificates have been issued, they must be properly endorsed and
should be sent by registered or certified mail with the written request.

.a trust company or commercial bank whose deposits are insured by the Bank
Insurance Fund which is administered by the Federal Deposit Insurance
Corporation ("FDIC");

.a member of the New York, American, Boston, Midwest, or Pacific Stock
Exchanges;

.a savings bank or savings and loan association whose deposits are insured by
the Savings Association Insurance Fund, which is administered by the FDIC; or

.any other "eligible guarantor institution," as defined in the Securities
Exchange Act of 1934.

The Trust does not accept signatures guaranteed by a notary public.

REDEEMING SHARES BY TELEPHONE

Shares may be redeemed in minimum amounts of $1,000 by telephoning the Trust.
Telephone instructions may be recorded and if reasonable procedures are not
followed by the Trust, it may be liable for losses due to unauthorized or
fraudulent telephone instructions. An authorization form permitting the Trust to
accept telephone requests must first be completed. Authorization forms and
information on this service are available from Federated Securities Corp.

If the redemption request is received before 12:00 p.m. (Eastern time), the
proceeds will be wired the same day to the shareholder's account at a domestic
commercial bank which is a member of the Federal Reserve System, and those
shares redeemed will not be entitled to that day's dividend. A daily dividend
will be paid on shares redeemed if the redemption request is received after
12:00 p.m. (Eastern time). However, the proceeds are not wired until the
following business day.

ACCOUNTS WITH LOW BALANCES

Before shares are redeemed to close an account, the shareholder is notified in
writing and allowed 30 days to purchase additional shares to meet the minimum
requirement.

--------------------------------------------------------------------------------
SHAREHOLDER INFORMATION

VOTING RIGHTS

MASSACHUSETTS PARTNERSHIP LAW

--------------------------------------------------------------------------------
TAX INFORMATION

FEDERAL INCOME TAX

Dividends of the Trust representing net interest income earned on some temporary
investments and any realized net short-term gains are taxed as ordinary income.

These tax consequences apply whether dividends are received in cash or as
additional shares.

PENNSYLVANIA CORPORATE AND
PERSONAL PROPERTY TAXES

In the opinion of Houston, Houston & Donnelly, counsel to the Trust:

.the Trust is not subject to Pennsylvania corporate or personal property taxes;
and

Shareholders are urged to consult their own tax advisers regarding the status of
their accounts under state and local tax laws.

--------------------------------------------------------------------------------
PERFORMANCE INFORMATION

From time to time, the Trust advertises its yield, effective yield, and
tax-equivalent yield for Institutional Service Shares.

Advertisements and sales literature may also refer to total return. Total return
represents the change, over a specified period of time, in the value of an
investment in the shares after reinvesting all income distributions. It is
calculated by dividing that change by the initial investment and is expressed as
a percentage.

From time to time, advertisements for the Trust may refer to ratings, rankings,
and other information in certain financial publications and/or compare the
Trust's performance to certain indices.

--------------------------------------------------------------------------------
OTHER CLASSES OF SHARES

The Trust also offers another class of shares called Investment Shares.
Investment Shares are sold at net asset value through brokers and dealers and
are subject to a minimum initial investment of $500.

Investment Shares and Institutional Service Shares are subject to certain of the
same expenses; however, Investment Shares are subject to a Shareholder Services
Plan. Expense differences between Investment Shares and Institutional Service
Shares may affect the performance of each class.

To obtain more information and a prospectus for Institutional Service Shares,
investors may call 1-800-235-4699 or contact their financial institution.

TAX-FREE
INSTRUMENTS TRUST
INSTITUTIONAL SERVICE SHARES
PROSPECTUS

An Open-End, Diversified,
Management
Investment Company

Prospectus dated May 31, 1995

[LOGO] FEDERATED SECURITIES CORP.
---------------------------------------------
Distributor
A subsidiary of FEDERATED INVESTORS

FEDERATED INVESTORS TOWER
PITTSBURGH, PENNSYLVANIA 15222-3779

876924200
8062810A-SS (5/95)

TAX-FREE INSTRUMENTS TRUST
INVESTMENT SHARES
INSTITUTIONAL SERVICE SHARES
Combined Statement of Additional Information

This Combined Statement of Additional Information should be read
with the prospectus(es) of Tax-Free Instruments Trust (the
"Trust") dated May 31, 1995. This Statement is not a prospectus.
To receive a copy of a prospectus, write or call the Trust.

FEDERATED INVESTORS TOWER
PITTSBURGH, PA 15222-3779

Statement dated May 31, 1995

Federated Securities Corp.
Distributor
A subsidiary of Federated
Investors
INVESTMENT POLICIES 1
Acceptable Investments 1
Participation Interests 1
Municipal Leases 1
When-Issued And Delayed
Delivery Transactions 1
Repurchase Agreements 1
Reverse Repurchase Agreements 2
INVESTMENT LIMITATIONS 2
BROKERAGE TRANSACTIONS 4
TAX-FREE INSTRUMENTS TRUST
MANAGEMENT 5
Share Ownership 9
Trustees Compensation 10
Trustee Liability 10
INVESTMENT ADVISORY SERVICES 11
Investment Adviser 11
Advisory Fees 11
SHAREHOLDER SERVICES PLAN 11
DETERMINING NET ASSET VALUE 12
REDEMPTION IN KIND 12
THE TRUST'S TAX STATUS 12
PERFORMANCE INFORMATION 12
Yield 12
Effective Yield 13
Tax-Equivalent Yield 13
Tax-Equivalency Table 13
Performance Comparisons 15
About Federated Investors 15
Financial Statements 16
INVESTMENT POLICIES
Unless indicated otherwise, the policies described below may be changed
by the Trustees without shareholder approval. Shareholders will be
notified before any material change in these policies becomes effective.
ACCEPTABLE INVESTMENTS
When determining whether a security presents minimal credit risks, the
investment adviser will consider the creditworthiness of: the issuer of
the security, the issuer of any demand feature applicable to the
security, or any guarantor of either the security or any demand feature.
PARTICIPATION INTERESTS
The financial institutions from which the Trust purchases participation
interests frequently provide or secure from another financial
institution irrevocable letters of credit or guarantees and give the
Trust the right to demand payment of the principal amounts of the
participation interests plus accrued interest on short notice (usually
within seven days). The municipal securities subject to the
participation interests are not limited to the Trust's maximum maturity
requirements so long as the participation interests include the right to
demand payment from the issuers of those interests. By purchasing these
participation interests, the Trust is buying a security meeting the
maturity and quality requirements of the Trust and also is receiving the
tax-free benefits of the underlying securities.
MUNICIPAL LEASES
The Trust may purchase municipal securities in the form of participation
interests that represent an undivided proportional interest in lease
payments by a governmental or nonprofit entity. The lease payments and
other rights under the lease provide for and secure payments on the
certificates. Lease obligations may be limited by municipal charter or
the nature of the appropriation for the lease. Furthermore, a lease may
provide that the participants cannot accelerate lease obligations upon
default. The participants would only be able to enforce lease payments
as they became due. In the event of a default or failure of
appropriation, unless the participation interests are credit enhanced,
it is unlikely that the participants would be able to obtain an
acceptable substitute source of payment.
In determining the liquidity of municipal lease securities, the
investment adviser, under the authority delegated by the Board of
Trustees, will base its determination on the following factors: whether
the lease can be terminated by the lessee; the potential recovery, if
any, from a sale of the leased property upon termination of the lease;
the lessee's general credit strength (e.g., its debt, administrative,
economic and financial characteristics and prospects); the likelihood
that the lessee will discontinue appropriating funding for the leased
property because the property is no longer deemed essential to its
operations (e.g., the potential for an "event of non-appropriation");
and any credit enhancement or legal recourse provided upon an event of
non-appropriation or other termination of the lease.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS
These transactions are made to secure what is considered to be an
advantageous price or yield for the Trust. No fees or other expenses,
other than normal transaction costs, are incurred. However, liquid
assets of the Trust sufficient to make payment for the securities to be
purchased are segregated on the Trust's records at the trade date. These
assets are marked to market daily and are maintained until the
transaction has been settled. As a matter of operating policy, which may
be changed without shareholder approval, the Trust does not intend to
engage in when-issued and delayed delivery transactions to an extent
that would cause the segregation of more than 20% of the total value of
its assets.
REPURCHASE AGREEMENTS
Certain securities in which the Trust invests may be purchased pursuant
to repurchase agreements. Repurchase agreements are arrangements in
which banks, broker/dealers, and other recognized financial institutions
sell securities to the Trust and agree at the time of sale to repurchase
them at a mutually agreed upon time and price. To the extent that the
seller does not repurchase the securities from the Trust, the Trust
could receive less than the repurchase price on any sale of such
securities. The Trust or its custodian will take possession of the
securities subject to repurchase agreements, and these securities will
be marked to market daily. In the event that a defaulting seller filed
for bankruptcy or became insolvent, disposition of such securities by
the Trust might be delayed pending court action. The Trust believes that
under the regular procedures normally in effect for custody of the
Trust's portfolio securities subject to repurchase agreements, a court
of competent jurisdiction would rule in favor of the Trust and allow
retention or disposition of such securities. The Trust will only enter
into repurchase agreements with banks and other recognized financial
institutions, such as broker/dealers, which are deemed by the Trust's
adviser to be creditworthy pursuant to guidelines established by the
Trustees.
REVERSE REPURCHASE AGREEMENTS
The Trust may also enter into reverse repurchase agreements. These
transactions are similar to borrowing cash. In a reverse repurchase
agreement, the Trust transfers possession of a portfolio instrument in
return for a percentage of the instrument's market value in cash and
agrees that on a stipulated date in the future the Trust will repurchase
the portfolio instrument by remitting the original consideration plus
interest at an agreed upon rate. The use of reverse repurchase
agreements may enable the Trust to avoid selling portfolio instruments
at a time when a sale may be deemed to be disadvantageous, but does not
ensure this result. When effecting reverse repurchase agreements, liquid
assets of the Trust, in a dollar amount sufficient to make payment for
the obligations to be purchased, are: segregated on the Trust's records
at the trade date; marked to market daily; and maintained until the
transaction is settled.
INVESTMENT LIMITATIONS
Selling Short and Buying on Margin
The Trust will not sell any securities short or purchase any securities
on margin but may obtain such short-term credits as are necessary for
clearance of purchases and sales of securities.
Borrowing Money
The Trust will not borrow money except as a temporary measure for
extraordinary or emergency purposes and then only in amounts not in
excess of 5% of the value of its total assets. In addition, the Trust
may enter into reverse repurchase agreements and otherwise borrow up to
one-third of the value of its total assets, including the amount
borrowed, in order to meet redemption requests without immediately
selling portfolio securities. This latter practice is not for investment
leverage but solely to facilitate management of the portfolio by
enabling the Trust to meet redemption requests when the liquidation of
portfolio securities would be inconvenient or disadvantageous.
Interest paid on borrowed funds will serve to reduce the Trust's income.
The Trust will liquidate any borrowings as soon as possible and may not
purchase any portfolio instruments while any borrowings are outstanding.
Pledging Assets
The Trust will not mortgage, pledge, or hypothecate its assets except as
necessary to secure permitted borrowings. In those cases, it may pledge
assets having a market value not exceeding 10% of the value of total
assets at the time of the pledge.
Lending Cash or Securities
The Trust will not lend any of its assets, except that it may acquire
publicly or non-publicly issued municipal securities or temporary
investments or enter into repurchase agreements, as permitted by its
investment objective and policies.
Investing in Commodities and Minerals
The Trust will not purchase or sell commodities, commodity contracts, or
oil, gas, or other mineral exploration or development programs.
Investing in Real Estate
The Trust will not purchase or sell real estate, although it may invest
in municipal securities secured by real estate or interests in real
estate.
Underwriting
The Trust will not underwrite any issue of securities, except as it may
be deemed to be an underwriter under the Securities Act of 1933 in
connection with the sale of securities in accordance with its investment
objective, policies, and limitations.
Acquiring Securities
The Trust will not acquire the voting securities of any issuer, except
as a part of a merger, consolidation, reorganization, or acquisition of
assets. It may not invest in securities issued by any other investment
company or investment trust.
Investing in Illiquid Securities
The Trust will not invest more than 10% of the value of its total assets
in illiquid securities, including repurchase agreements maturing in more
than seven days.
Investing in New Issuers
The Trust will not invest more than 5% of the value of its total assets
in securities of issuers (or in the alternative, guarantors, where
applicable) which have records of less than three years of continuous
operations, including the operation of any predecessor.
Investing in Issuers Whose Securities Are Owned by Officers of the Trust
The Trust will not purchase or retain the securities of any issuer other
than the Trust if the officers and Trustees of the Trust or its
investment adviser individually owning beneficially more than 1/2 of 1%
of the issuer's securities together beneficially own more than 5% of the
issuer's securities.
Investing in Options
The Trust will not purchase or sell puts, calls, straddles, spreads, or
any combination of them, except that the Trust may purchase municipal
securities from a bank, broker, dealer, or other person accompanied by
the agreement of the seller to purchase them, at the Trust's option,
prior to maturity..
Concentration of Investments
The Trust will not purchase securities (other than securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities)
if, as a result of such purchase, more than 25% of the value of its
assets would be invested in any one industry.
This policy applies to securities which are related in such a way that
an economic, business, or political development affecting one security
would also affect the other securities (such as securities paid from
revenues from selected projects in transportation, public works,
education, or housing.
Diversification of Investments
With respect to securities comprising 75% of its assets, the Trust will
not invest more than 5% of its total assets in the securities of any one
issuer.
Under this limitation, each governmental subdivision, including states
and the District of Columbia, territories, possessions of the United
States, or their political subdivisions, agencies, authorities,
instrumentalities, or similar entities, will be considered a separate
issuer if its assets and revenues are separate from those of the
governmental body creating it and the security is backed only by its own
assets and revenues.
Industrial development bonds backed only by the assets and revenues of a
non governmental user are considered to be issued solely by that user.
If in the case of an industrial development bond or governmental issued
security, a governmental or some other entity guarantees the security,
such guarantee would be considered a separate security issued by the
guarantor, as well as the issuer, subject to limited exclusions allowed
by the 1940 Act.
The above limitations cannot be changed without shareholder approval.
The following investment limitations, however, may be changed by the
Trustees without shareholder approval. Shareholders will be notified
before any material change in these limitations becomes effective.
Investing in Restricted Securities
The Trust will not invest in securities subject to restrictions on
resale under federal securities law.
Investing in Securities of Other Investment Companies
The Trust will not purchase securities of other investment companies,
except as part of a merger, consolidation, or other acquisition.
Investing for Control
The Trust will not invest in securities of a company for the purpose of
exercising control or management.
For purposes of the above limitations, the Trust considers instruments
issued by a U.S. branch of a domestic bank or savings and loan having
capital, surplus, and undivided profits in excess of $100,000,000 at the
time of investment to be "cash items." Except with respect to borrowing
money, if a percentage limitation is adhered to at the time of
investment, a later increase or decrease in percentage resulting from
any change in value or net assets will not result in a violation of such
limitation.
The Trust did not borrow money or pledge securities in excess of 5% of
the value of its net assets during the last fiscal year and has no
present intent to do so during the coming fiscal year.
BROKERAGE TRANSACTIONS
When selecting brokers and dealers to handle the purchase and sale of
portfolio instruments, the adviser looks for prompt execution of the
order at a favorable price. In working with dealers, the adviser will
generally use those who are recognized dealers in specific portfolio
instruments, except when a better price and execution of the order can
be obtained elsewhere. The adviser makes decisions on portfolio
transactions and selects brokers and dealers subject to guidelines
established by the Board of Trustees. The adviser may select brokers and
dealers who offer brokerage and research services. These services may be
furnished directly to the Trust or to the adviser and may include:
advice as to the advisability of investing in securities; security
analysis and reports; economic studies; industry studies; receipt of
quotations for portfolio evaluations; and similar services. Research
services provided by brokers and dealers may be used by the adviser or
its affiliates in advising the Trust and other accounts. To the extent
that receipt of these services may supplant services for which the
adviser or its affiliates might otherwise have paid, it would tend to
reduce their expenses. The adviser and its affiliates exercise
reasonable business judgment in selecting brokers who offer brokerage
and research services to execute securities transactions. They determine
in good faith that commissions charged by such persons are reasonable in
relationship to the value of the brokerage and research services
provided. During the fiscal year(s) ended March 31, 1995, 1994 and 1993,
the Trust paid no brokerage commissions.
Although investment decisions for the Trust are made independently from
those of the other accounts managed by the adviser, investments of the
type the Trust may make may also be made by those other accounts. When
the Trust and one or more other accounts managed by the adviser are
prepared to invest in, or desire to dispose of, the same security,
available investments or opportunities for sales will be allocated in a
manner believed by the adviser to be equitable to each. In some cases,
this procedure may adversely affect the price paid or received by the
Trust or the size of the position obtained or disposed of by the Trust.
In other cases, however, it is believed that coordination and the
ability to participate in volume transactions will be to the benefit of
the Trust.
TAX-FREE INSTRUMENTS TRUST MANAGEMENT
Officers and Trustees are listed with their addresses, present positions
with Tax-Free Instruments Trust, and principal occupations.

John F. Donahue@*
Federated Investors Tower
Pittsburgh, PA
Birthdate: July 28, 1924
Chairman and Trustee
Chairman and Trustee, Federated Investors, Federated Advisers, Federated
Management, and Federated Research; Chairman and Director, Federated
Research Corp.; Chairman, Passport Research, Ltd.; Director, AEtna Life
and Casualty Company; Chief Executive Officer and Director, Trustee, or
Managing General Partner of the Funds. Mr. Donahue is the father
of J. Christopher Donahue, Vice President of the Trust.

Thomas G. Bigley
28th Floor, One Oxford Centre
Pittsburgh, PA
Birthdate: February 3, 1934
Trustee
Director, Oberg Manufacturing Co.; Chairman of the Board, Children's
Hospital of Pittsburgh; Director, Trustee, or Managing General Partner
of the Funds; formerly, Senior Partner, Ernst & Young LLP.

John T. Conroy, Jr.
Wood/IPC Commercial Department
John R. Wood and Associates, Inc., Realtors
3255 Tamiami Trail North
Naples, FL
Birthdate: June 23, 1937
Trustee
President, Investment Properties Corporation; Senior Vice-President,
John R. Wood and Associates, Inc., Realtors; President, Northgate
Village Development Corporation; Partner or Trustee in private real
estate ventures in Southwest Florida; Director, Trustee, or Managing
General Partner of the Funds; formerly, President, Naples Property
Management, Inc.

William J. Copeland
One PNC Plaza - 23rd Floor
Pittsburgh, PA
Birthdate: July 4, 1918
Trustee
Director and Member of the Executive Committee, Michael Baker, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly,
Vice Chairman and Director, PNC Bank, N.A., and PNC Bank Corp. and
Director, Ryan Homes, Inc.

James E. Dowd
571 Hayward Mill Road
Concord, MA
Birthdate: May 18, 1922
Trustee
Attorney-at-law; Director, The Emerging Germany Fund, Inc.; Director,
Trustee, or Managing General Partner of the Funds.

Lawrence D. Ellis, M.D.*
3471 Fifth Avenue, Suite 1111
Pittsburgh, PA
Birthdate: October 11, 1932
Trustee
Professor of Medicine and Member, Board of Trustees, University of
Pittsburgh; Medical Director, University of Pittsburgh Medical Center -
Downtown; Member, Board of Directors, University of Pittsburgh Medical
Center; formerly, Hematologist, Oncologist, and Internist, Presbyterian
and Montefiore Hospitals; Director, Trustee, or Managing General Partner
of the Funds.

Edward L. Flaherty, Jr.@
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: June 18, 1924
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Director,
Eat'N Park Restaurants, Inc., and Statewide Settlement Agency, Inc.;
Director, Trustee, or Managing General Partner of the Funds; formerly,
Counsel, Horizon Financial, F.A., Western Region.

Peter E. Madden
70 Westcliff Road
Westin, MA
Birthdate: March 16, 1942
Trustee
Consultant; State Representative, Commonwealth of Massachusetts;
Director, Trustee, or Managing General Partner of the Funds; formerly,
President, State Street Bank and Trust Company and State Street Boston
Corporation.

Gregor F. Meyer
Henny, Kochuba, Meyer and Flaherty
Two Gateway Center - Suite 674
Pittsburgh, PA
Birthdate: October 6, 1926
Trustee
Attorney-at-law; Partner, Henny, Kochuba, Meyer and Flaherty; Chairman,
Meritcare, Inc.; Director, Eat'N Park Restaurants, Inc.; Director,
Trustee, or Managing General Partner of the Funds; formerly, Vice
Chairman, Horizon Financial, F.A.

John E. Murray, Jr., J.D., S.J.D.
President, Duquesne University
Pittsburgh, PA
Birthdate: December 20, 1932
Trustee
President, Law Professor, Duquesne University; Consulting Partner,
Mollica, Murray and Hogue; Director, Trustee or Managing General Partner
of the Funds.

Wesley W. Posvar
1202 Cathedral of Learning
University of Pittsburgh
Pittsburgh, PA
Birthdate: September 14, 1925
Trustee
Professor, Foreign Policy and Management Consultant; Trustee, Carnegie
Endowment for International Peace, RAND Corporation, Online Computer
Library Center, Inc., and U.S. Space Foundation; Chairman, Czecho Slovak
Management Center; Director, Trustee, or Managing General Partner of the
Funds; President Emeritus, University of Pittsburgh; formerly, Chairman,
National Advisory Council for Environmental Policy and Technology.

Marjorie P. Smuts
4905 Bayard Street
Pittsburgh, PA
Birthdate: July 21, 1935
Trustee
Public relations/marketing consultant; Director, Trustee, or Managing
General Partner of the Funds.

Glen R. Johnson
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 2, 1929
President
Trustee, Federated Investors; President and/or Trustee of some of the
Funds; staff member, Federated Securities Corp. and Federated
Administrative Services.

J. Christopher Donahue
Federated Investors Tower
Pittsburgh, PA
Birthdate: April 11, 1949
Vice President
President and Trustee, Federated Investors, Federated Advisers,
Federated Management, and Federated Research; President and Director,
Federated Research Corp.; President, Passport Research, Ltd.; Trustee,
Federated Administrative Services, Federated Services Company, and
Federated Shareholder Services; President or Vice President of the
Funds; Director, Trustee, or Managing General Partner of some of the
Funds. Mr. Donahue is the son of John F. Donahue, Chairman and Trustee
of the Trust.

Richard B. Fisher
Federated Investors Tower
Pittsburgh, PA
Birthdate: May 17, 1923
Vice President
Executive Vice President and Trustee, Federated Investors; Director,
Federated Research Corp.; Chairman and Director, Federated Securities
Corp.; President or Vice President of some of the Funds; Director or
Trustee of some of the Funds.

Edward C. Gonzales
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 22, 1930
Vice President and Treasurer
Vice President, Treasurer, and Trustee, Federated Investors; Vice
President and Treasurer, Federated Advisers, Federated Management,
Federated Research, Federated Research Corp., and Passport Research,
Ltd.; Executive Vice President, Treasurer, and Director, Federated
Securities Corp.; Trustee, Federated Services Company and Federated
Shareholder Services; Chairman, Treasurer, and Trustee, Federated
Administrative Services; Trustee or Director of some of the Funds; Vice
President and Treasurer of the Funds.

John W. McGonigle
Federated Investors Tower
Pittsburgh, PA
Birthdate: October 26, 1938
Vice President and Secretary
Vice President, Secretary, General Counsel, and Trustee, Federated
Investors; Vice President, Secretary, and Trustee, Federated Advisers,
Federated Management, and Federated Research; Vice President and
Secretary, Federated Research Corp. and Passport Research, Ltd.;
Trustee, Federated Services Company; Executive Vice President,
Secretary, and Trustee, Federated Administrative Services; Secretary and
Trustee, Federated Shareholder Services; Executive Vice President and
Director, Federated Securities Corp.; Vice President and Secretary of
the Funds.

* This Trustee is deemed to be an "interested person" as defined
in the Investment Company Act of 1940, as amended.
@ Member of the Executive Committee. The Executive Committee of
the Board of Trustees handles the responsibilities of the Board
of Trustees between meetings of the Board.
As used in the table above, "The Funds" and "Funds" mean the following
investment companies: American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust; Automated
Government Money Trust; California Municipal Cash Trust; Cash Trust
Series II; Cash Trust Series, Inc.; DG Investor Series; Edward D. Jones
& Co. Daily Passport Cash Trust; Federated ARMs Fund; Federated Exchange
Fund, Ltd.; Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income Securities
Trust; Federated Income Trust; Federated Index Trust; Federated
Institutional Trust; Federated Intermediate Government Trust; Federated
Master Trust; Federated Municipal Trust; Federated Short-Intermediate
Government Trust; Federated Short-Term U.S. Government Trust; Federated
Stock Trust; Federated Tax-Free Trust; Federated U.S. Government Bond
Fund; First Priority Funds; Fixed Income Securities, Inc.; Fortress
Adjustable Rate U.S. Government Fund, Inc.; Fortress Municipal Income
Fund, Inc.; Fortress Utility Fund, Inc.; Fund for U.S. Government
Securities, Inc.; Government Income Securities, Inc.; High Yield Cash
Trust; Insight Institutional Series, Inc.; Insurance Management Series;
Intermediate Municipal Trust; International Series, Inc.; Investment
Series Funds, Inc.; Investment Series Trust; Liberty Equity Income Fund,
Inc.; Liberty High Income Bond Fund, Inc.; Liberty Municipal Securities
Fund, Inc.; Liberty U.S. Government Money Market Trust; Liberty Term
Trust, Inc. - 1999; Liberty Utility Fund, Inc.; Liquid Cash Trust;
Managed Series Trust; Money Market Management, Inc.; Money Market
Obligations Trust; Money Market Trust; Municipal Securities Income
Trust; Newpoint Funds; New York Municipal Cash Trust; 111 Corcoran
Funds; Peachtree Funds; The Planters Funds; RIMCO Monument Funds; The
Shawmut Funds; Short-Term Municipal Trust; Star Funds; The Starburst
Funds; The Starburst Funds II; Stock and Bond Fund, Inc.; Sunburst
Funds; Targeted Duration Trust; Trademark Funds; Trust for Financial
Institutions; Trust For Government Cash Reserves; Trust for Short-Term
U.S. Government Securities; Trust for U.S. Treasury Obligations; The
Virtus Funds; World Investment Series, Inc.
SHARE OWNERSHIP
Officers and Trustees as a group own less than 1% of the Trust's
outstanding shares.
As of May 5, 1995, the following shareholder(s) of record owned 5% or
more of the outstanding Investment Shares of the Trust: Stephens Inc.,
Little Rock, Arkansas, owned approximately 24,328,314 shares (12.22%);
and BHC Securities Inc., Philadelphia, Pennsylvania, owned approximately
25,052,842 shares (12.58%).
As of May 5, 1995, the following shareholder(s) of record owned 5% or
more of the outstanding Institutional Service Shares of the Trust:
State Street Bank and Trust Company, North Quincy, Massachusetts, owned
approximately 17,385,457 shares (5.09%); Egap & Co., Burlington,
Vermont, owned approximately 19,971,638 shares (5.85%); Citibank, NA,
Long Island, New York, owned approximately 20,837,885 shares (6.10%);
Unit & Co., Portland, Oregon, owned approximately 21,311,960 shares
(6.24%); VAR & Co., St. Paul, Minnesota, owned approximately 34,917,682
shares (10.23%); and Fiduciary Trust Company International, New York,
New York, owned approximately 70,225,400 shares (20.58%).
TRUSTEES COMPENSATION

AGGREGATE
NAME , COMPENSATION
POSITION WITH FROM TOTAL COMPENSATION PAID
TRUST TRUST*# FROM FUND COMPLEX +

John F. Donahue $0 $0 for the Trust and
68 other investment companies in the Fund
Complex
Thomas G. Bigley $1,319 $20,688 for the Trust and
49 other investment companies in the Fund
Complex
John T. Conroy $2,918 $117,202 for the Trust and
64 other investment companies in the Fund
Complex
William J. Copeland $2,918 $117,202 for the Trust and
64 other investment companies in the Fund
Complex
James E. Dowd $2,918 $117,202 for the Trust and
64 other investment companies in the Fund
Complex
Lawrence D. Ellis, M.D. $2,647 $106,460 for the Trust and
64 other investment companies in the Fund
Complex
Edward L. Flaherty, Jr. $2,918 $117,202 for the Trust and
64 other investment companies in the Fund
Complex
Peter E. Madden $2,243 $90,563 for the Trust and
64 other investment companies in the Fund
Complex
Gregor F. Meyer $2,647 $106,460 for the Trust and
64 other investment companies in the Fund
Complex
John E. Murray, Jr. $0 $0 for the Trust and
64 other investment companies in the Fund
Complex
Wesley W. Posvar $2,647 $106,460 for the Trust and
64 other investment companies in the Fund
Complex
Marjorie P. Smuts $2,647 $106,460 for the Trust and
64 other investment companies in the Fund
Complex

*Information is furnished for the fiscal year ended March 31, 1995.
#The aggregate compensation is provided for the Trust which is comprised
of 1 portfolio.
+The information is provided for the last calendar year.
TRUSTEE LIABILITY
The Declaration of Trust provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law. However, they are not
protected against any liability to which they would otherwise be subject
by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of their
office.
INVESTMENT ADVISORY SERVICES
INVESTMENT ADVISER
The Trust's investment adviser is Federated Management. It is a
subsidiary of Federated Investors. All the voting securities of
Federated Investors are owned by a trust, the trustees of which are John
F. Donahue, his wife and his son, J. Christopher Donahue.
The adviser shall not be liable to the Trust or any shareholder for any
losses that may be sustained in the purchase, holding, or sale of any
security or for anything done or omitted by it, except acts or omissions
involving willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties imposed upon it by its contract with the Trust.
ADVISORY FEES
For its advisory services, Federated Management receives an annual
investment advisory fee as described in the prospectus. For the fiscal
years ended March 31, 1995, 1994, and 1993, the adviser earned
$8,274,688, $8,264,650, and $7,625,674, respectively, of which
$2,852,758, $2,322,865, and $1,446,925, respectively, were waived.
State Expense Limitations
The adviser has undertaken to comply with the expense limitations
established by certain states for investment companies whose
shares are registered for sale in those states. If the Trust's
normal operating expenses (including the investment advisory fee,
but not including brokerage commissions, interest, taxes, and
extraordinary expenses) exceed 2-1/2% per year of the first $30
million of average net assets, 2% per year of the next $70 million
of average net assets, and 1-1/2% per year of the remaining
average net assets, the adviser will reimburse the Trust for its
expenses over the limitation.
If the Trust's monthly projected operating expenses exceed this
limitation, the investment advisory fee paid will be reduced by
the amount of the excess, subject to an annual adjustment. If the
expense limitation is exceeded, the amount to be reimbursed by the
adviser will be limited, in any single fiscal year, by the amount
of the investment advisory fees.
This arrangement is not part of the advisory contract and may be
amended or rescinded in the future.
TRUST ADMINISTRATION
Federated Administrative Services, a subsidiary of Federated Investors,
provides administrative personnel and services to the Trust for a fee as
described in the prospectus. Prior to March 1, 1994, Federated
Administrative Services, Inc., also a subsidiary of Federated Investors,
served as the Trust's Administrator. (For purposes of this Statement of
Additional Information, Federated Administrative Services and Federated
Administrative Services, Inc. may hereinafter collectively be referred
to as the "Administrators.") For the fiscal years ended March 31, 1995
and March 31, 1994, the Administrators earned $1,252,788 and $954,364.
For the fiscal year ended March 31, 1993, Federated Administrative
Services, Inc. earned $684,378. Dr. Henry J. Gailliot, an officer of
Federated Management, the adviser to the Trust, holds approximately 20%
of the outstanding common stock and serves as a director of Commercial
Data Services, Inc., a company which provides computer processing
services to Federated Administrative Services.
SHAREHOLDER SERVICES PLAN
This arrangement permits the payment of fees to Federated Shareholder
Services and financial institutions to cause services to be provided
which are necessary for the maintenance of shareholder accounts and to
encourage personal services to shareholders by a representative who has
knowledge of the shareholder's particular circumstances and goals. These
activities and services may include, but are not limited to: providing
office space, equipment, telephone facilities, and various clerical,
supervisory, computer, and other personnel as necessary or beneficial to
establish and maintain shareholder accounts and records; processing
purchase and redemption transactions and automatic investments of client
account cash balance; answering routine client inquiries; and assisting
clients in changing dividend options, account designations, and
addresses. By adopting the Shareholder Services Plan, the Board of
Trustees expects that the Trust will benefit by: (1) providing personal
services to shareholders; (2) investing shareholder assets with a
minimum of delay and administrative detail; (3) enhancing shareholder
recordkeeping systems; and (4) responding promptly to shareholders'
requests and inquiries concerning their accounts. For the fiscal period
ending March 31, 1995, payments in the amount of $2,075,824 were made
pursuant to the Shareholder Services Plan, all of which was paid to
financial institutions.
Custodian and Portfolio Recordkeeper. State Street Bank and Trust
Company, Boston, MA, is custodian for the securities and cash of the
Trust. It also provides certain accounting and recordkeeping services
with respect to the Trust's portfolio investments.
Transfer Agent. As transfer agent, Federated Services Company maintains
all necessary shareholder records. For its services, the transfer agent
receives a fee based on the number of shareholder accounts.
DETERMINING NET ASSET VALUE
The Trustees have decided that the best method for determining the value
of portfolio instruments is amortized cost. Under this method, portfolio
instruments are valued at the acquisition cost as adjusted for
amortization of premium or accumulation of discount rather than at
current market value. Accordingly, neither the amount of daily income
nor the net asset value is affected by any unrealized appreciation or
depreciation of the portfolio. In periods of declining interest rates,
the indicated daily yield on shares of the Trust computed by dividing
the annualized daily income on the Trust's portfolio by the net asset
value computed as above may tend to be higher than a similar computation
made by using a method of valuation based upon market prices and
estimates. In periods of rising interest rates, the opposite may be
true.
The Trust's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with certain conditions in Rule 2a-
7 (the "Rule") promulgated by the Securities and Exchange Commission
under the Investment Company Act of 1940. Under the Rule, the Trustees
must establish procedures reasonably designed to stabilize the net asset
value per share, as computed for purposes of distribution and
redemption, at $1.00 per share, taking into account current market
conditions and the Trust's investment objective. The procedures include
monitoring the relationship between the amortized cost value per share
and the net asset value per share based upon available indications of
market value. The Trustees will decide what, if any, steps should be
taken if there is a difference of more than 0.5 of 1% between the two
values. The Trustees will take any steps they consider appropriate (such
as redemption in kind or shortening the average portfolio maturity) to
minimize any material dilution or other unfair results arising from
differences between the two methods of determining net asset value.
REDEMPTION IN KIND
The Trust is obligated to redeem shares solely in cash up to $250,000 or
1% of the Trust's net asset value, whichever is less, for any one
shareholder within a 90-day period. Any redemption beyond this amount
will also be in cash unless the Trustees determine that further payments
should be in kind. In such cases, the Trust will pay all or a portion of
the remainder of the redemption in portfolio instruments valued in the
same way as the Trust determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable. Redemption in kind is not as liquid as a cash redemption. If
redemption is made in kind, shareholders who sell these securities could
receive less than the redemption value and could incur certain
transaction costs.
THE TRUST'S TAX STATUS
To qualify for the special tax treatment afforded to regulated
investment companies, the Trust must, among other requirements: derive
at least 90% of its gross income from dividends, interest, and gains
from the sale of securities; derive less than 30% of its gross income
from the sale of securities held less than three months; invest in
securities within certain statutory limits; and distribute to its
shareholders at least 90% of its net income earned during the year.
PERFORMANCE INFORMATION
Performance depends upon such variables as: portfolio quality; average
portfolio maturity; type of instruments in which the portfolio is
invested; changes in interest rates; changes in expenses; and the
relative amount of cash flow. To the extent that financial institutions
and broker/dealers charge fees in connection with services provided in
conjunction with an investment in shares of the Trust, the performance
will be reduced for those shareholders paying those fees.
YIELD
The yield is calculated based upon the seven days ending on the day of
the calculation, called the "base period." This yield is computed by:
determining the net change in the value of a hypothetical account with a
balance of one share at the beginning of the base period, with the net
change excluding capital changes but including the value of any
additional shares purchased with dividends earned from the original one
share and all dividends declared on the original and any purchased
shares; dividing the net change in the account's value by the value of
the account at the beginning of the base period to determine the base
period return; and multiplying the base period return by 365/7.
For the seven-day period ended March 31, 1995, the yield for Investment
Shares was 3.48%, Institutional Service Shares was 3.63%.
EFFECTIVE YIELD
The effective yield is calculated by compounding the unannualized base
period return by: adding 1 to the base period return; raising the sum to
the 365/7th power; and subtracting 1 from the result.
For the seven-day period ended March 31, 1995, the effective yield for
Investment Shares was 3.54%, Institutional Service Shares was 3.70%.
TAX-EQUIVALENT YIELD
For the seven-day period ended March 31, 1995, the tax-equivalent yield
for Investment Shares was 5.76%, Institutional Service Shares was 6.01%.
TAX-EQUIVALENCY TABLE
A tax-equivalency table may be used in advertising and sales literature.
The interest earned by the municipal securities in the Trust's portfolio
generally remains free from federal regular income tax,* and is often
free from state and local taxes as well. As the table below indicates, a
"tax-free" investment can be an attractive choice for investors,
particularly in times of narrow spreads between tax-free and taxable
yields.
TAXABLE YIELD EQUIVALENT FOR 1995

FEDERAL INCOME TAX BRACKET:
15.00% 28.00% 31.00% 36.00% 39.60%

JOINT $1- $39,001- $94,251- $143,601- OVER
RETURN 39,000 94,250 143,600 256,500 256,500

SINGLE $1- $23,351- $56,551- $117,951- OVER
RETURN 23,350 56,550 117,950 256,500 256,500

Tax-Exempt
Yield Taxable Yield Equivalent

1.00% 1.18% 1.39% 1.45% 1.56%
1.66%
1.50% 1.76% 2.08% 2.17% 2.34%
2.48%
2.00% 2.35% 2.78% 2.90% 3.13%
3.31%
2.50% 2.94% 3.47% 3.62% 3.91%
4.14%
3.00% 3.53% 4.17% 4.35% 4.69%
4.97%
3.50% 4.12% 4.86% 5.07% 5.47%
5.79%
4.00% 4.71% 5.56% 5.80% 6.25%
6.62%
4.50% 5.29% 6.25% 6.52% 7.03%
7.45%
5.00% 5.88% 6.94% 7.25% 7.81%
8.28%
5.50% 6.47% 7.64% 7.97% 8.59%
9.11%
6.00% 7.06% 8.33% 8.70% 9.38%
9.93%
6.50% 7.65% 9.03% 9.42% 10.16%
10.76%
7.00% 8.24% 9.72% 10.14% 10.94%
11.59%
7.50% 8.82% 10.42% 10.87% 11.72%
12.42%
8.00% 9.41% 11.11% 11.59% 12.50%
13.25%

Note: The maximum marginal tax rate for each bracket was used in
calculating the taxable yield equivalent. Furthermore, additional
state and local taxes paid on comparable taxable investments were
not used to increase federal deductions.
The chart above is for illustrative purposes only. It is not an
indicator of past or future performance of Trust shares.
* Some portion of the Trust's income may be subject to the
federal alternative minimum tax and state and local income taxes.
PERFORMANCE COMPARISONS
Investors may use financial publications and/or indices to obtain a more
complete view of the Trust's performance. When comparing performance,
investors should consider all relevant factors such as the composition
of any index used, prevailing market conditions, portfolio compositions
of other funds, and methods used to value portfolio securities and
compute offering price. The financial publications and/or indices which
the Trust uses in advertising may include:
O LIPPER ANALYTICAL SERVICES, INC., ranks funds in various fund
categories based on total return, which assumes the reinvestment
of all income dividends and capital gains distributions, if any.
o DONOGHUE'S MONEY FUND REPORT publishes annualized yields of money
market funds weekly. Donoghue's MONEY MARKET INSIGHT publication
reports monthly and 12-month-to-date investment results for the
same money funds.
o MONEY, a monthly magazine, regularly ranks money market funds in
various categories based on the latest available seven-day
effective yield.
ABOUT FEDERATED INVESTORS
Federated is dedicated to meeting investor needs which is
reflected in its investment decision making structured,
straightforward, and consistent. This has resulted in a
history of competitive performance with a range of
competitive investment products that have gained the
confidence of thousands of clients and their customers.
The company's disciplined security selection process is
firmly rooted in sound methodologies backed by fundamental
and technical research. Investment decisions are made and
executed by teams of portfolio managers, analysts, and
traders dedicated to specific market sectors.
In the money market sector, Federated gained prominence in
the mutual fund industry in 1974 with the creation of the
first institutional money market fund. Simultaneously, the
company pioneered the use of the amortized cost method of
accounting for valuing shares of money market funds, a
principal means used by money managers today to value money
market fund shares. Other innovations include the first
institutional tax-free money market fund. As of December 31,
1994, Federated managed more than $31 billion in assets
across approximately 43 money market funds, including 17
government, 8 prime and 18 municipal with assets
approximating $17 billion, $7.4 billion and $6.6 billion,
respectively.
J. Thomas Madden, Executive Vice President, oversees
Federated's equity and high yield corporate bond management
while William D. Dawson, Executive Vice President, oversees
Federated's domestic fixed income management. Henry A.
Frantzen, Executive Vice President, oversees the management
of Federated's international portfolios.
MUTUAL FUND MARKET
Twenty-seven percent of American households are pursuing
their financial goals through mutual funds. These investors,
as well as businesses and institutions, have entrusted over
$2 trillion to the more than 5,500 funds available.*
Federated Investors, through its subsidiaries, distributes
mutual funds for a variety of investment applications.
Specific markets include:
INSTITUTIONAL
Federated meets the needs of more than 4,000 institutional
clients nationwide by managing and servicing separate
accounts and mutual funds for a variety of applications,
including defined benefit and defined contribution programs,
cash management, and asset/liability management.
Institutional clients include corporations, pension funds,
tax-exempt entities, foundations/endowments, insurance
companies, and investment and financial advisors. The
marketing effort to these institutional clients is headed by
John B. Fisher, President, Institutional Sales Division.

*source: Investment Company Institute
TRUST ORGANIZATIONS
Other institutional clients include close relationships with
more than 1,500 banks and trust organizations. Virtually all
of the trust divisions of the top 100 bank holding companies
use Federated funds in their clients' portfolios. The
marketing effort to trust clients is headed by Mark R.
Gensheimer, Executive Vice President, Bank Marketing &
Sales.
BROKER/DEALERS AND BANK BROKER/DEALER SUBSIDIARIES
Federated mutual funds are available to consumers through
major brokerage firms nationwide--including 200 New York
Stock Exchange firms--supported by more wholesalers than any
other mutual fund distributor. The marketing effort to these
firms is headed by James F. Getz, President, Broker/Dealer
Division.

FINANCIAL STATEMENTS
The financial statements for the fiscal year ended March 31, 1995, are
incorporated herein by reference to the Annual Report of the Trust dated
March 31, 1995; (File Nos. 2-75122 and 811-3337). A copy of the report
may be obtained without charge by contacting the Trust at the address
listed in the prospectus.
876924101
876924200
8062810B (5/95)

PART C. OTHER INFORMATION

Item 24. Financial Statements and Exhibits:

(a) Financial Statements (Incorporated by reference to the
Annual Report of Registrant dated March 31, 1995 (File Nos.
2-75122 and 811-3337)
(b) Exhibits:
(1) Conformed Copy of Amended Declaration of Trust of the
Registrant +;
(2) Copy of By-Laws of Registrant (5);
(3) Not applicable;
(4) Copy of Specimen Certificate for Shares of Beneficial
Interest of the Registrant (2);
(5) Copy of Investment Advisory Contract of the Registrant
(7);
(6) Conformed copy of Distributor's Contract of the
Registrant (10);
(7) Not applicable;
(8) Conformed Copy of Custodian Agreement of the
Registrant +;
(9) (i) Conformed Copy of Transfer Agency and Service
Agreement of the Registrant +;
(ii) Conformed copy of Shareholder Services Plan of
the Registrant +;
(iii) Conformed copy of Administrative Serivces
Agreement +;
(iv) Conformed copy Shareholder Services Plan
Agreement +;
(v) Copy of Shareholder Services Sub-Contract +;
(10) Copy of Opinion and Consent of Counsel as to
legality of shares being registered (2);
(11) Conformed copy of Consent of Independent Public
Accountants +;
(12) Not applicable;
(13) Letter Agreement (3);
(14) Not applicable;

+ All exhibits have been filed electronically.

2. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 1 to its Registration Statement on Form N-1 filed on
August 13, 1982. (File No. 2-75122 and File No. 811-3337)
3. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 to its Registration Statement on Form N-1 filed on
November 4, 1982. (File No. 2-75122 and File No. 811-3337)
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 to its Registration Statement on Form N-1A filed on
July 14, 1987. (File No. 2-75122 and File No. 811-3337)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 to its Registration Statement on Form N-1A filed on
July 28, 1989. (File No. 2-75122 and File No. 811-3337).
10. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 23 to its Registration Statement on Form N-1A filed on May
26, 1994. (File No. 2-75122 and File No. 811-3337).
(15) (i) Copy of Distribution Plan of the
Registrant (4);
(ii) Copy of Sales Agreement of the Registrant (5);
(iii) Copy of Rule 12b-1 Agreement of the Registrant
(4);
(iv) Copy of Dealer Agreement of the
Registrant (4)
(16) Copy of Schedule of Computation of Yield
Calculation; +
(17) Copy of Financial Data Schedule; +
(18) Not applicable;
(19) Conformed copy of Power of Attorney; +

Item 25. Persons Controlled by or Under Common Control with Registrant:

None

Item 26. Number of Holders of Securities:
Number of Record Holders
Title of Class as of May 5, 1995

Shares of Beneficial Interest (no par value)

Investment Shares 6,297

Institutional Service Shares 497

Item 27. Indemnification: (7)

Item 28. Business and Other Connections of Investment Adviser

For a description of the other business of the investment adviser,
see the section entitled "Trust Information - Management of the
Trust" in Part A. The affiliations with the Registrant of three
of the Trustees and one of the Officers of the investment adviser
are included in Part B of this Registration Statement under "Tax-
Free Instruments Trust Management." The remaining Trustee of the
investment adviser, his position with the investment adviser, and,
in parentheses, his principal occupation is: Mark D. Olson,
Partner, Wilson, Halbrook & Bayard, 107 W. Market Street,
Georgetown, Delaware 19947.

+ All exhibits have been filed electronically.

4. Response is incorporated by reference to Registrant's Pre-Effective
Amendment No. 2 to its Registration Statement on Form N-1 filed on
January 30, 1984. (File No. 2-75122 and File No. 811-3337)
5. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 7 to its Registration Statement on Form N-1A filed on
July 14, 1987. (File No. 2-75122 and File No. 811-3337)
7. Response is incorporated by reference to Registrant's Post-Effective
Amendment No. 12 to its Registration Statement on Form N-1A filed on
July 28, 1989. (File No. 2-75122 and File No. 811-3337).
The remaining Officers of the investment adviser are: William D.
Dawson, J. Thomas Madden and Mark L. Mallon, Executive Vice
Presidents; Henry J. Gailliot, Senior Vice President-Economist;
Peter R. Anderson, and J. Alan Minteer, Senior Vice Presidents;
J. Scott Albrecht, Randall A. Bauer, David A. Briggs, Jonathan C.
Conley, Deborah A. Cunningham, Michael P. Donnelly, Mark E.
Durbiano, Kathleen M. Foody-Malus, Thomas M. Franks, Edward C.
Gonzales, Jeff A. Kozemchek, Marian R. Marinack, John W.
McGonigle, Susan M. Nason, Mary Jo Ochson, Robert J. Ostrowski,
Frederick L. Plautz, Charles A. Ritter, James D. Roberge, Sandra
L. Weber and Christopher Wiles, Vice Presidents, Edward C.
Gonzales, Treasurer, and John W. McGonigle, Secretary. The
business address of each of the Officers of the Federated Research
Division of the investment adviser is Federated Investors Tower,
Pittsburgh, PA 15222-3779. These individuals are also officers of
a majority of the investment advisers to the Funds listed in
Part B of this Registration Statement.

Item 29. Principal Underwriters:

(a) Federated Securities Corp., the Distributor for shares of the
Registrant, also acts as principal underwriter for the
following open-end investment companies: Alexander Hamilton
Funds; American Leaders Fund, Inc.; Annuity Management
Series; Arrow Funds; Automated Cash Management Trust;
Automated Government Money Trust; BayFunds; The Biltmore
Funds; The Biltmore Municipal Funds; California Municipal
Cash Trust; Cash Trust Series, Inc.; Cash Trust Series II; DG
Investor Series; Edward D. Jones & Co. Daily Passport Cash
Trust; Federated ARMs Fund; Federated Exchange Fund, Ltd.;
Federated GNMA Trust; Federated Government Trust; Federated
Growth Trust; Federated High Yield Trust; Federated Income
Securities Trust; Federated Income Trust; Federated Index
Trust; Federated Institutional Trust; Federated Intermediate
Government Trust; Federated Master Trust; Federated Municipal
Trust; Federated Short-Intermediate Government Trust;
Federated Short-Term U.S. Government Trust; Federated Stock
Trust; Federated Tax-Free Trust; Federated U.S. Government
Bond Fund; First Priority Funds; First Union Funds; Fixed
Income Securities, Inc.; Fortress Adjustable Rate U.S.
Government Fund, Inc.; Fortress Municipal Income Fund, Inc.;
Fortress Utility Fund, Inc.; Fountain Square Funds; Fund for
U.S. Government Securities, Inc.; Government Income
Securities, Inc.; High Yield Cash Trust; Independence One
Mutual Funds; Insight Institutional Series, Inc.; Insurance
Management Series; Intermediate Municipal Trust;
International Series Inc.; Investment Series Funds, Inc.;
Investment Series Trust; Liberty Equity Income Fund, Inc.;
Liberty High Income Bond Fund, Inc.; Liberty Municipal
Securities Fund, Inc.; Liberty U.S. Government Money Market
Trust; Liberty Utility Fund, Inc.; Liquid Cash Trust; Managed
Series Trust; Marshall Funds, Inc.; Money Market Management,
Inc.; Money Market Obligations Trust; Money Market Trust; The
Monitor Funds; Municipal Securities Income Trust; Newpoint
Funds; New York Municipal Cash Trust; 111 Corcoran Funds;
Peachtree Funds; The Planters Funds; RIMCO Monument Funds;
The Shawmut Funds; Short-Term Municipal Trust; SouthTrust
Vulcan Funds; Star Funds; The Starburst Funds; The Starburst
Funds II; Stock and Bond Fund, Inc.; Sunburst Funds; Targeted
Duration Trust; Tower Mutual Funds; Trademark Funds; Trust
for Financial Institutions; Trust for Government Cash
Reserves; Trust for Short-Term U.S. Government Securities;
Trust for U.S. Treasury Obligations; The Virtus Funds; Vision
Fiduciary Funds, Inc.; Vision Group of Funds, Inc.; and World
Investment Series, Inc.

Federated Securities Corp. also acts as principal underwriter
for the following closed-end investment company: Liberty
Term Trust, Inc.- 1999.

(b)

(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant

Richard B. Fisher Director, Chairman, Chief Vice President
Federated Investors Tower Executive Officer, Chief
Pittsburgh, PA 15222-3779 Operating Officer,
Asst. Treasurer and Asst.
Secretary, Federated
Securities Corp.

Edward C. Gonzales Director, Executive Vice President
Federated Investors Tower President, and Treasurer,
Pittsburgh, PA 15222-3779 Federated Securities
Corp.

John W. McGonigle Director, Executive Vice Vice President and
Federated Investors Tower President, and Assistant Secretary
Pittsburgh, PA 15222-3779 Secretary, Federated
Securities Corp.

John B. Fisher President-Institutional Sales, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James F. Getz President-Broker/Dealer, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark R. Gensheimer Executive Vice President of --
Federated Investors Tower Bank/Trust
Pittsburgh, PA 15222-3779 Federated Securities Corp.

Mark W. Bloss Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Theodore Fadool, Jr. Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Bryant R. Fisher Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Christopher T. Fives Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

James S. Hamilton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant

James M. Heaton Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

H. Joseph Kennedy Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Keith Nixon Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Solon A. Person, IV Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Timothy C. Pillion Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Thomas E. Territ Senior Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John B. Bohnet Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard W. Boyd Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jane E. Broeren-Lambesis Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Albert H. Burchfield Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mary J. Combs Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

R. Edmond Connell, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Kevin J. Crenny Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Daniel T. Culbertson Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

G. Michael Cullen Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant

Laura M. Deger Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jill Ehrenfeld Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Joseph L. Epstein Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark D. Fisher Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael D. Fitzgerald Vice President
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Joseph D. Gibbons Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Craig S. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Richard C. Gonzales Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Newton Heston, III Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Scott A. Hutton Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William E. Kugler Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Stephen A. La Versa Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Dennis M. Laffey Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Mark J. Miehl Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant

Richard C. Mihm Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

J. Michael Miller Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

R. Jeffrey Niss Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael P. O'Brien Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Robert D. Oehlschlager Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Robert F. Phillips Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Eugene B. Reed Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Paul V. Riordan Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

John C. Shelar, Jr. Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

David W. Spears Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jeffrey A. Stewart Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Jamie M. Teschner Vice President --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

William C. Tustin Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Paul A. Uhlman Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779
(1) (2) (3)
Name and Principal Positions and Offices Positions and Offices
Business Address With Underwriter With Registrant

Richard B. Watts Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Michael P. Wolff Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Charles H. Field Assistant Vice President, Assistant
Federated Investors Tower Federated Securities Corp. Secretary
Pittsburgh, PA 15222-3779

Philip C. Hetzel Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Charlene H. Jennings Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

Ernest L. Linane Assistant Vice President, --
Federated Investors Tower Federated Securities Corp.
Pittsburgh, PA 15222-3779

S. Elliott Cohan Secretary, Federated Assistant
Federated Investors Tower Securities Corp. Secretary
Pittsburgh, PA 15222-3779

Item 30. Location of Accounts and Records:

All accounts and records required to be maintained by Section
31(a) of the Investment Company Act of 1940 and Rules 31a-1
through 31a-b promulgated thereunder are maintained at one of the
following locations:

Registrant Federated Investors Tower
Tax-Free Instruments Trust Pittsburgh, PA 15222-3779

Federated Services Company P.O. Box 8600
Transfer Agent, Dividend Boston, MA 02266-8600
Disbursing Agent and Portfolio
Recordkeeper

Federated Administrative Services Federated Investors Tower
Administrator Pittsburgh, PA 15222-3779

Federated Management Federated Investors Tower
Adviser Pittsburgh, PA 15222-3779

State Street Bank and Trust P.O. Box 8600
Company Boston, MA 02266-8600
Custodian

Item 31. Management Services: Not applicable.
Item 32. Undertakings:

Registrant hereby undertakes to comply with the provisions of
Section 16(c) of the 1940 Act with respect to the removal of
Trustees and the calling of special shareholder meetings by
shareholders.

Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest
annual report to shareholders, upon request and without charge.
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, TAX-FREE INSTRUMENTS
TRUST, certifies that it meets all of the requirements for effectiveness
of this Amendment to its Registration Statement pursuant to Rule 485(b)
under the Securities Act of 1933 and has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Pittsburgh and
Commonwealth of Pennsylvania, on the 24th day of May, 1995.

TAX-FREE INSTRUMENTS TRUST

BY: /s/Charles H. Field
Charles H. Field, Assistant Secretary
Attorney in Fact for John F. Donahue
May 24, 1995

Pursuant to the requirements of the Securities Act of 1933, this
Amendment to its Registration Statement has been signed below by the
following person in the capacity and on the date indicated:

NAME TITLE DATE

By: /s/Charles H. Field
Charles H. Field Attorney In Fact May 24, 1995
ASSISTANT SECRETARY For the Persons
Listed Below

NAME TITLE

John F. Donahue* Chairman and Trustee
(Chief Executive Officer)

Glen R. Johnson* President

Edward C. Gonzales* Vice President and Treasurer
(Principal Financial and
Accounting Officer)

Thomas G. Bigley Trustee

John T. Conroy, Jr.* Trustee

William J. Copeland* Trustee

James E. Dowd* Trustee

Lawrence D. Ellis, M.D.* Trustee

Edward L. Flaherty, Jr.* Trustee

Peter E. Madden* Trustee

Gregor F. Meyer* Trustee

John E. Murray, Jr. Trustee

Wesley W. Posvar* Trustee

Marjorie P. Smuts* Trustee

* By Power of Attorney

Exhibit (11) under N-1A
Exhibit 23 under Item 601/Reg SK

ARTHUR ANDERSEN LLP

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use in Post-
Effective Amendment No. 25 to Form N-1A Registration Statement of Tax-Free
Instruments Trust of our report dated May 12, 1995, on the financial
statements as of March 31, 1995, included in or made part of this
registration statement.

By: ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP

Pittsburgh, Pennsylvania,
May 19, 1995

Exhibit 19 under Form N-1A
Exhibit 24 under Item 601/Reg. S-K

POWER OF ATTORNEY

Each person whose signature appears below hereby constitutes and
appoints the Secretary and Assistant Secretary of Tax-Free Instruments Trust
and the Assistant General Counsel of Federated Investors, and each of them,
their true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for them and in their names, place and stead,
in any and all capacities, to sign any and all documents to be filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, the
Securities Exchange Act of 1934 and the Investment Company Act of 1940, by
means of the EDGAR; and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents, and each of them,
full power and authority to sign and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as each of them might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do or cause to
be done by virtue thereof.

SIGNATURES TITLE DATE

/s/John F. Donahue Chairman and Trustee April 28, 1995
John F. Donahue (Chief Executive Officer)

/s/Glen R. Johnson President April 28, 1995
Glen R. Johnson

/s/Edward C. Gonzales Vice President and April 28, 1995
Edward C. Gonzales Treasurer(Principal
Financial and
Accounting Officer)

/s/Thomas G. Bigley Trustee April 28, 1995
Thomas G. Bigley

/s/John T. Conroy, Jr. Trustee April 28, 1995
John T. Conroy, Jr.

/s/William J. Copeland Trustee April 28, 1995
William J. Copeland
SIGNATURES TITLE DATE

/s/James E. Dowd Trustee April 28, 1995
James E. Dowd

/s/Lawrence D. Ellis, M.D. Trustee April 28, 1995
Lawrence D. Ellis, M.D.

/s/Edward L. Flaherty, Jr. Trustee April 28, 1995
Edward L. Flaherty, Jr.

/s/Peter E. Madden Trustee April 28, 1995
Peter E. Madden

/s/Gregor F. Meyer Trustee April 28, 1995
Gregor F. Meyer

/s/John E. Murray Trustee April 28, 1995
John E. Murray, Jr.

/s/Wesley W. Posvar Trustee April 28, 1995
Wesley W. Posvar

/s/Marjorie P. Smuts Trustee April 28, 1995
Marjorie P. Smuts

Sworn to and subscribed before me this 28th day of April, 1995

/s/Marie M. Hamm
Notary Public

Notarial Seal
Marie M. Hamm, Notary Public
Plum Boro, Allegheny County
My Commission Expires Sept. 16, 1996

Member, Pennsylvania Association of Notaries

Exhibit 8 under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

CUSTODIAN CONTRACT
Between
FEDERATED INVESTMENT COMPANIES
and
STATE STREET BANK AND TRUST COMPANY
and
FEDERATED SERVICES COMPANY

TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held by It 1
2. Duties of the Custodian With Respect to Property of the Funds Held
by the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 2
2.3 Registration of Securities 5
2.4 Bank Accounts 6
2.5 Payments for Shares 7
2.6 Availability of Federal Funds 7
2.7 Collection of Income 7
2.8 Payment of Fund Moneys 8
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased. 9
2.10 Payments for Repurchases or Redemptions of Shares of a Fund 9
2.11 Appointment of Agents 10
2.12 Deposit of Fund Assets in Securities System 10
2.13 Segregated Account 12
2.14 Joint Repurchase Agreements 13
2.15 Ownership Certificates for Tax Purposes 13
2.16 Proxies 13
2.17 Communications Relating to Fund Portfolio Securities 13
2.18 Proper Instructions 14
2.19 Actions Permitted Without Express Authority 14
2.20 Evidence of Authority 15
2.21 Notice to Trust by Custodian Regarding Cash Movement. 15
3. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income 15
4. Records 16
5. Opinion of Funds' Independent Public Accountants/Auditors 16
6. Reports to Trust by Independent Public Accountants/Auditors 17
7. Compensation of Custodian 17
8. Responsibility of Custodian 17
9. Effective Period, Termination and Amendment 19
10. Successor Custodian 20
11. Interpretive and Additional Provisions 21
12. Massachusetts Law to Apply 22
13. Notices 22
14. Counterparts 22
15. Limitations of Liability 22

CUSTODIAN CONTRACT

This Contract between those INVESTMENT COMPANIES listed on Exhibit 1, as it
may be amended from time to time, (the "Trust"), which may be Massachusetts
business trusts or Maryland corporations or have such other form of
organization as may be indicated, on behalf of the portfolios (hereinafter
collectively called the "Funds" and individually referred to as a "Fund") of
the Trust, having its principal place of business at Federated Investors
Tower, Pittsburgh, Pennsylvania, 15222-3779, and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, having its principal place of business
at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian", and FEDERATED SERVICES COMPANY, a Delaware business trust
company, having its principal place of business at Federated Investors Tower,
Pittsburgh, Pennsylvania, 15222-3779, hereinafter called ("Company").

WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Trust hereby employs the Custodian as the custodian of the assets of
each of the Funds of the Trust. Except as otherwise expressly provided
herein, the securities and other assets of each of the Funds shall be
segregated from the assets of each of the other Funds and from all other
persons and entities. The Trust will deliver to the Custodian all
securities and cash owned by the Funds and all payments of income,
payments of principal or capital distributions received by them with
respect to all securities owned by the Funds from time to time, and the
cash consideration received by them for shares ("Shares") of beneficial
interest/capital stock of the Funds as may be issued or sold from time
to time. The Custodian shall not be responsible for any property of the
Funds held or received by the Funds and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.18), the Custodian shall from time to time employ one or more sub-
custodians upon the terms specified in the Proper Instructions, provided
that the Custodian shall have no more or less responsibility or
liability to the Trust or any of the Funds on account of any actions or
omissions of any sub-custodian so employed than any such sub-custodian
has to the Custodian.
2. Duties of the Custodian With Respect to Property of the Funds Held
by the Custodian
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of each Fund all non-cash property,
including all securities owned by each Fund, other than securities
which are maintained pursuant to Section 2.12 in a clearing agency
which acts as a securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System", or securities which are
subject to a joint repurchase agreement with affiliated funds
pursuant to Section 2.14. The Custodian shall maintain records of
all receipts, deliveries and locations of such securities, together
with a current inventory thereof, and shall conduct periodic
physical inspections of certificates representing stocks, bonds and
other securities held by it under this Contract in such manner as
the Custodian shall determine from time to time to be advisable in
order to verify the accuracy of such inventory. With respect to
securities held by any agent appointed pursuant to Section 2.11
hereof, and with respect to securities held by any sub-custodian
appointed pursuant to Section 1 hereof, the Custodian may rely upon
certificates from such agent as to the holdings of such agent and
from such sub-custodian as to the holdings of such sub-custodian,
it being understood that such reliance in no way relieves the
Custodian of its responsibilities under this Contract. The
Custodian will promptly report to the Trust the results of such
inspections, indicating any shortages or discrepancies uncovered
thereby, and take appropriate action to remedy any such shortages
or discrepancies.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by a Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper
Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
(1) Upon sale of such securities for the account of a Fund and
receipt of payment therefor;
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Trust;
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other
similar offers for portfolio securities of a Fund, in
accordance with the provisions of Section 2.17 hereof;
(5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable; provided
that, in any such case, the cash or other consideration is to
be delivered to the Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name
of a Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent
appointed pursuant to Section 2.11 or into the name or nominee
name of any sub-custodian appointed pursuant to Section 1; or
for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or
number of units; provided that, in any such case, the new
securities are to be delivered to the Custodian;
(7) Upon the sale of such securities for the account of a Fund, to
the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery custom";
provided that in any such case, the Custodian shall have no
responsibility or liability for any loss arising from the
delivery of such securities prior to receiving payment for such
securities except as may arise from the Custodian's own failure
to act in accordance with the standard of reasonable care or
any higher standard of care imposed upon the Custodian by any
applicable law or regulation if such above-stated standard of
reasonable care were not part of this Contract;
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment
of the securities of the issuer of such securities, or pursuant
to provisions for conversion contained in such securities, or
pursuant to any deposit agreement; provided that, in any such
case, the new securities and cash, if any, are to be delivered
to the Custodian;
(9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
(10)For delivery in connection with any loans of portfolio
securities of a Fund, but only against receipt of adequate
collateral in the form of (a) cash, in an amount specified by
the Trust, (b) certificated securities of a description
specified by the Trust, registered in the name of the Fund or
in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer, or (c)
securities of a description specified by the Trust, transferred
through a Securities System in accordance with Section 2.12
hereof;
(11)For delivery as security in connection with any borrowings
requiring a pledge of assets by a Fund, but only against
receipt of amounts borrowed, except that in cases where
additional collateral is required to secure a borrowing already
made, further securities may be released for the purpose;
(12)For delivery in accordance with the provisions of any agreement
among the Trust or a Fund, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934, as
amended, (the "Exchange Act") and a member of The National
Association of Securities Dealers, Inc. ("NASD"), relating to
compliance with the rules of The Options Clearing Corporation
and of any registered national securities exchange, or of any
similar organization or organizations, regarding escrow or
other arrangements in connection with transactions for a Fund;
(13)For delivery in accordance with the provisions of any agreement
among the Trust or a Fund, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract Market, or any
similar organization or organizations, regarding account
deposits in connection with transaction for a Fund;
(14)Upon receipt of instructions from the transfer agent ("Transfer
Agent") for a Fund, for delivery to such Transfer Agent or to
the holders of shares in connection with distributions in kind,
in satisfaction of requests by holders of Shares for repurchase
or redemption; and
(15)For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Trust on behalf of
a Fund signed by an officer of the Trust and certified by its
Secretary or an Assistant Secretary, specifying the securities
to be delivered, setting forth the purpose for which such
delivery is to be made, declaring such purpose to be a proper
corporate purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian
(other than bearer securities) shall be registered in the name of a
particular Fund or in the name of any nominee of the Fund or of any
nominee of the Custodian which nominee shall be assigned
exclusively to the Fund, unless the Trust has authorized in writing
the appointment of a nominee to be used in common with other
registered investment companies affiliated with the Fund, or in the
name or nominee name of any agent appointed pursuant to Section
2.11 or in the name or nominee name of any sub-custodian appointed
pursuant to Section 1. All securities accepted by the Custodian on
behalf of a Fund under the terms of this Contract shall be in
"street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate
bank account or accounts in the name of each Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of
this Contract, and shall hold in such account or accounts, subject
to the provisions hereof, all cash received by it from or for the
account of each Fund, other than cash maintained in a joint
repurchase account with other affiliated funds pursuant to Section
2.14 of this Contract or by a particular Fund in a bank account
established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940, as amended, (the "1940 Act").
Funds held by the Custodian for a Fund may be deposited by it to
its credit as Custodian in the Banking Department of the Custodian
or in such other banks or trust companies as it may in its
discretion deem necessary or desirable; provided, however, that
every such bank or trust company shall be qualified to act as a
custodian under the 1940 Act and that each such bank or trust
company and the funds to be deposited with each such bank or trust
company shall be approved by vote of a majority of the Board of
Trustees/Directors ("Board") of the Trust. Such funds shall be
deposited by the Custodian in its capacity as Custodian for the
Fund and shall be withdrawable by the Custodian only in that
capacity. If requested by the Trust, the Custodian shall furnish
the Trust, not later than twenty (20) days after the last business
day of each month, an internal reconciliation of the closing
balance as of that day in all accounts described in this section to
the balance shown on the daily cash report for that day rendered to
the Trust.
2.5 Payments for Shares. The Custodian shall make such arrangements
with the Transfer Agent of each Fund, as will enable the Custodian
to receive the cash consideration due to each Fund and will deposit
into each Fund's account such payments as are received from the
Transfer Agent. The Custodian will provide timely notification to
the Trust and the Transfer Agent of any receipt by it of payments
for Shares of the respective Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between the
Trust and the Custodian, the Custodian shall make federal funds
available to the Funds as of specified times agreed upon from time
to time by the Trust and the Custodian in the amount of checks,
clearing house funds, and other non-federal funds received in
payment for Shares of the Funds which are deposited into the Funds'
accounts.
2.7 Collection of Income.
(1) The Custodian shall collect on a timely basis all income and
other payments with respect to registered securities held
hereunder to which each Fund shall be entitled either by law or
pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with
respect to bearer securities if, on the date of payment by the
issuer, such securities are held by the Custodian or its agent
thereof and shall credit such income, as collected, to each
Fund's custodian account. Without limiting the generality of
the foregoing, the Custodian shall detach and present for
payment all coupons and other income items requiring
presentation as and when they become due and shall collect
interest when due on securities held hereunder. The collection
of income due the Funds on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of
the Trust. The Custodian will have no duty or responsibility
in connection therewith, other than to provide the Trust with
such information or data as may be necessary to assist the
Trust in arranging for the timely delivery to the Custodian of
the income to which each Fund is properly entitled.
(2) The Custodian shall promptly notify the Trust whenever income
due on securities is not collected in due course and will
provide the Trust with monthly reports of the status of past
due income unless the parties otherwise agree.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out moneys of each Fund in the
following cases only:
(1) Upon the purchase of securities, futures contracts or options
on futures contracts for the account of a Fund but only (a)
against the delivery of such securities, or evidence of title
to futures contracts, to the Custodian (or any bank, banking
firm or trust company doing business in the United States or
abroad which is qualified under the 1940 Act to act as a
custodian and has been designated by the Custodian as its agent
for this purpose) registered in the name of the Fund or in the
name of a nominee of the Custodian referred to in Section 2.3
hereof or in proper form for transfer, (b) in the case of a
purchase effected through a Securities System, in accordance
with the conditions set forth in Section 2.12 hereof or (c) in
the case of repurchase agreements entered into between the
Trust and any other party, (i) against delivery of the
securities either in certificate form or through an entry
crediting the Custodian's account at the Federal Reserve Bank
with such securities or (ii) against delivery of the receipt
evidencing purchase for the account of the Fund of securities
owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from
the Fund;
(2) In connection with conversion, exchange or surrender of
securities owned by a Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares of a Fund issued by
the Trust as set forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred by a Fund,
including but not limited to the following payments for the
account of the Fund: interest; taxes; management, accounting,
transfer agent and legal fees; and operating expenses of the
Fund, whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
(5) For the payment of any dividends on Shares of a Fund declared
pursuant to the governing documents of the Trust;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Executive Committee of the Trust on behalf of
a Fund signed by an officer of the Trust and certified by its
Secretary or an Assistant Secretary, specifying the amount of
such payment, setting forth the purpose for which such payment
is to be made, declaring such purpose to be a proper purpose,
and naming the person or persons to whom such payment is to be
made.
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for purchase of
securities for the account of a Fund is made by the Custodian in
advance of receipt of the securities purchased, in the absence of
specific written instructions from the Trust to so pay in advance,
the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been
received by the Custodian.
2.10Payments for Repurchases or Redemptions of Shares of a Fund. From
such funds as may be available for the purpose of repurchasing or
redeeming Shares of a Fund, but subject to the limitations of the
Declaration of Trust/Articles of Incorporation and any applicable
votes of the Board of the Trust pursuant thereto, the Custodian
shall, upon receipt of instructions from the Transfer Agent, make
funds available for payment to holders of shares of such Fund who
have delivered to the Transfer Agent a request for redemption or
repurchase of their shares including without limitation through
bank drafts, automated clearinghouse facilities, or by other means.
In connection with the redemption or repurchase of Shares of the
Funds, the Custodian is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders.
2.11Appointment of Agents. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other bank
or trust company which is itself qualified under the 1940 Act and
any applicable state law or regulation, to act as a custodian, as
its agent to carry out such of the provisions of this Section 2 as
the Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.12Deposit of Fund Assets in Securities System. The Custodian may
deposit and/or maintain securities owned by the Funds in a clearing
agency registered with the Securities and Exchange Commission
("SEC") under Section 17A of the Exchange Act, which acts as a
securities depository, or in the book-entry system authorized by
the U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in
accordance with applicable Federal Reserve Board and SEC rules and
regulations, if any, and subject to the following provisions:
(1) The Custodian may keep securities of each Fund in a Securities
System provided that such securities are represented in an
account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for
customers;
(2) The records of the Custodian with respect to securities of the
Funds which are maintained in a Securities System shall
identify by book-entry those securities belonging to each Fund;
(3) The Custodian shall pay for securities purchased for the
account of each Fund upon (i) receipt of advice from the
Securities System that such securities have been transferred to
the Account, and (ii) the making of an entry on the records of
the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer securities
sold for the account of a Fund upon (i) receipt of advice from
the Securities System that payment for such securities has been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all advices
from the Securities System of transfers of securities for the
account of a Fund shall identify the Fund, be maintained for
the Fund by the Custodian and be provided to the Trust at its
request. Upon request, the Custodian shall furnish the Trust
confirmation of each transfer to or from the account of a Fund
in the form of a written advice or notice and shall furnish to
the Trust copies of daily transaction sheets reflecting each
day's transactions in the Securities System for the account of
a Fund.
(4) The Custodian shall provide the Trust with any report obtained
by the Custodian on the Securities System's accounting system,
internal accounting control and procedures for safeguarding
securities deposited in the Securities System;
(5) The Custodian shall have received the initial certificate,
required by Section 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage
to a Fund resulting from use of the Securities System by reason
of any negligence, misfeasance or misconduct of the Custodian
or any of its agents or of any of its or their employees or
from failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the Securities
System; at the election of the Trust, it shall be entitled to
be subrogated to the rights of the Custodian with respect to
any claim against the Securities System or any other person
which the Custodian may have as a consequence of any such loss
or damage if and to the extent that a Fund has not been made
whole for any such loss or damage.
(7) The authorization contained in this Section 2.12 shall not
relieve the Custodian from using reasonable care and diligence
in making use of any Securities System.
2.13Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or
accounts for and on behalf of each Fund, into which account or
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to
Section 2.12 hereof, (i) in accordance with the provisions of any
agreement among the Trust, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or
the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions for a
Fund, (ii) for purpose of segregating cash or government securities
in connection with options purchased, sold or written for a Fund or
commodity futures contracts or options thereon purchased or sold
for a Fund, (iii) for the purpose of compliance by the Trust or a
Fund with the procedures required by any release or releases of the
SEC relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution
of the Board or of the Executive Committee signed by an officer of
the Trust and certified by the Secretary or an Assistant Secretary,
setting forth the purpose or purposes of such segregated account
and declaring such purposes to be proper corporate purposes.
2.14Joint Repurchase Agreements. Upon the receipt of Proper
Instructions, the Custodian shall deposit and/or maintain any
assets of a Fund and any affiliated funds which are subject to
joint repurchase transactions in an account established solely for
such transactions for the Fund and its affiliated funds. For
purposes of this Section 2.14, "affiliated funds" shall include all
investment companies and their portfolios for which subsidiaries or
affiliates of Federated Investors serve as investment advisers,
distributors or administrators in accordance with applicable
exemptive orders from the SEC. The requirements of segregation set
forth in Section 2.1 shall be deemed to be waived with respect to
such assets.
2.15Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of income
or other payments with respect to securities of a Fund held by it
and in connection with transfers of securities.
2.16Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than
in the name of a Fund or a nominee of a Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Trust such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.17Communications Relating to Fund Portfolio Securities. The
Custodian shall transmit promptly to the Trust all written
information (including, without limitation, pendency of calls and
maturities of securities and expirations of rights in connection
therewith and notices of exercise of call and put options written
by the Fund and the maturity of futures contracts purchased or sold
by the Fund) received by the Custodian from issuers of the
securities being held for the Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to the Trust
all written information received by the Custodian from issuers of
the securities whose tender or exchange is sought and from the
party (or his agents) making the tender or exchange offer. If the
Trust desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the Trust shall
notify the Custodian in writing at least three business days prior
to the date on which the Custodian is to take such action.
However, the Custodian shall nevertheless exercise its best efforts
to take such action in the event that notification is received
three business days or less prior to the date on which action is
required.
2.18Proper Instructions. Proper Instructions as used throughout this
Section 2 means a writing signed or initialed by one or more person
or persons as the Board shall have from time to time authorized.
Each such writing shall set forth the specific transaction or type
of transaction involved. Oral instructions will be deemed to be
Proper Instructions if (a) the Custodian reasonably believes them
to have been given by a person previously authorized in Proper
Instructions to give such instructions with respect to the
transaction involved, and (b) the Trust promptly causes such oral
instructions to be confirmed in writing. Upon receipt of a
certificate of the Secretary or an Assistant Secretary as to the
authorization by the Board of the Trust accompanied by a detailed
description of procedures approved by the Board, Proper
Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board
and the Custodian are satisfied that such procedures afford
adequate safeguards for a Fund's assets.
2.19Actions Permitted Without Express Authority. The Custodian may in
its discretion, without express authority from the Trust:
(1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Trust in such form that it may be
allocated to the affected Fund;
(2) surrender securities in temporary form for securities in
definitive form;
(3) endorse for collection, in the name of a Fund, checks, drafts
and other negotiable instruments; and
(4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property of
each Fund except as otherwise directed by the Trust.
2.20Evidence of Authority. The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or
other instrument or paper reasonably believed by it to be genuine
and to have been properly executed on behalf of a Fund. The
Custodian may receive and accept a certified copy of a vote of the
Board of the Trust as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any
determination of or any action by the Board pursuant to the
Declaration of Trust/Articles of Incorporation as described in such
vote, and such vote may be considered as in full force and effect
until receipt by the Custodian of written notice to the contrary.
2.21Notice to Trust by Custodian Regarding Cash Movement. The
Custodian will provide timely notification to the Trust of any
receipt of cash, income or payments to the Trust and the release of
cash or payment by the Trust.
3. Duties of Custodian With Respect to the Books of Account and Calculation
of Net Asset Value and Net Income.
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of the Trust to keep the
books of account of each Fund and/or compute the net asset value per
share of the outstanding Shares of each Fund or, if directed in writing
to do so by the Trust, shall itself keep such books of account and/or
compute such net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of a Fund as described in the
Fund's currently effective prospectus and Statement of Additional
Information ("Prospectus") and shall advise the Trust and the Transfer
Agent daily of the total amounts of such net income and, if instructed
in writing by an officer of the Trust to do so, shall advise the
Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per share
and the daily income of a Fund shall be made at the time or times
described from time to time in the Fund's currently effective
Prospectus.
4. Records.
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will
meet the obligations of the Trust and the Funds under the 1940 Act, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, and specifically including identified cost records used for
tax purposes. All such records shall be the property of the Trust and
shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of
the Trust and employees and agents of the SEC. In the event of
termination of this Contract, the Custodian will deliver all such
records to the Trust, to a successor Custodian, or to such other person
as the Trust may direct. The Custodian shall supply daily to the Trust
a tabulation of securities owned by a Fund and held by the Custodian and
shall, when requested to do so by the Trust and for such compensation as
shall be agreed upon between the Trust and the Custodian, include
certificate numbers in such tabulations.
5. Opinion of Funds' Independent Public Accountants/Auditors.
The Custodian shall take all reasonable action, as the Trust may from
time to time request, to obtain from year to year favorable opinions
from each Fund's independent public accountants/auditors with respect to
its activities hereunder in connection with the preparation of the
Fund's registration statement, periodic reports, or any other reports to
the SEC and with respect to any other requirements of such Commission.
6. Reports to Trust by Independent Public Accountants/Auditors.
The Custodian shall provide the Trust, at such times as the Trust may
reasonably require, with reports by independent public
accountants/auditors for each Fund on the accounting system, internal
accounting control and procedures for safeguarding securities, futures
contracts and options on futures contracts, including securities
deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian for the Fund under this Contract;
such reports shall be of sufficient scope and in sufficient detail, as
may reasonably be required by the Trust, to provide reasonable assurance
that any material inadequacies would be disclosed by such examination
and, if there are no such inadequacies, the reports shall so state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between Company and the Custodian.
8. Responsibility of Custodian.
The Custodian shall be held to a standard of reasonable care in carrying
out the provisions of this Contract; provided, however, that the
Custodian shall be held to any higher standard of care which would be
imposed upon the Custodian by any applicable law or regulation if such
above stated standard of reasonable care was not part of this Contract.
The Custodian shall be entitled to rely on and may act upon advice of
counsel (who may be counsel for the Trust) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to
such advice, provided that such action is not in violation of applicable
federal or state laws or regulations, and is in good faith and without
negligence. Subject to the limitations set forth in Section 15 hereof,
the Custodian shall be kept indemnified by the Trust but only from the
assets of the Fund involved in the issue at hand and be without
liability for any action taken or thing done by it in carrying out the
terms and provisions of this Contract in accordance with the above
standards.
In order that the indemnification provisions contained in this Section 8
shall apply, however, it is understood that if in any case the Trust may
be asked to indemnify or save the Custodian harmless, the Trust shall be
fully and promptly advised of all pertinent facts concerning the
situation in question, and it is further understood that the Custodian
will use all reasonable care to identify and notify the Trust promptly
concerning any situation which presents or appears likely to present the
probability of such a claim for indemnification. The Trust shall have
the option to defend the Custodian against any claim which may be the
subject of this indemnification, and in the event that the Trust so
elects it will so notify the Custodian and thereupon the Trust shall
take over complete defense of the claim, and the Custodian shall in such
situation initiate no further legal or other expenses for which it shall
seek indemnification under this Section. The Custodian shall in no case
confess any claim or make any compromise in any case in which the Trust
will be asked to indemnify the Custodian except with the Trust's prior
written consent.
Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with a
separate Agreement entered into between the Custodian and the Trust.
If the Trust requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action
may, in the reasonable opinion of the Custodian, result in the Custodian
or its nominee assigned to a Fund being liable for the payment of money
or incurring liability of some other form, the Custodian may request the
Trust, as a prerequisite to requiring the Custodian to take such action,
to provide indemnity to the Custodian in an amount and form satisfactory
to the Custodian.
Subject to the limitations set forth in Section 15 hereof, the Trust
agrees to indemnify and hold harmless the Custodian and its nominee from
and against all taxes, charges, expenses, assessments, claims and
liabilities (including counsel fees) (referred to herein as authorized
charges) incurred or assessed against it or its nominee in connection
with the performance of this Contract, except such as may arise from it
or its nominee's own failure to act in accordance with the standard of
reasonable care or any higher standard of care which would be imposed
upon the Custodian by any applicable law or regulation if such above-
stated standard of reasonable care were not part of this Contract. To
secure any authorized charges and any advances of cash or securities
made by the Custodian to or for the benefit of a Fund for any purpose
which results in the Fund incurring an overdraft at the end of any
business day or for extraordinary or emergency purposes during any
business day, the Trust hereby grants to the Custodian a security
interest in and pledges to the Custodian securities held for the Fund by
the Custodian, in an amount not to exceed 10 percent of the Fund's gross
assets, the specific securities to be designated in writing from time to
time by the Trust or the Fund's investment adviser. Should the Trust
fail to make such designation, or should it instruct the Custodian to
make advances exceeding the percentage amount set forth above and should
the Custodian do so, the Trust hereby agrees that the Custodian shall
have a security interest in all securities or other property purchased
for a Fund with the advances by the Custodian, which securities or
property shall be deemed to be pledged to the Custodian, and the written
instructions of the Trust instructing their purchase shall be considered
the requisite description and designation of the property so pledged for
purposes of the requirements of the Uniform Commercial Code. Should the
Trust fail to cause a Fund to repay promptly any authorized charges or
advances of cash or securities, subject to the provision of the second
paragraph of this Section 8 regarding indemnification, the Custodian
shall be entitled to use available cash and to dispose of pledged
securities and property as is necessary to repay any such advances.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may
be terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take
effect not sooner than sixty (60) days after the date of such delivery
or mailing; provided, however that the Custodian shall not act under
Section 2.12 hereof in the absence of receipt of an initial certificate
of the Secretary or an Assistant Secretary that the Board of the Trust
has approved the initial use of a particular Securities System as
required in each case by Rule 17f-4 under the 1940 Act; provided
further, however, that the Trust shall not amend or terminate this
Contract in contravention of any applicable federal or state
regulations, or any provision of the Declaration of Trust/Articles of
Incorporation, and further provided, that the Trust may at any time by
action of its Board (i) substitute another bank or trust company for the
Custodian by giving notice as described above to the Custodian, or (ii)
immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the appropriate banking
regulatory agency or upon the happening of a like event at the direction
of an appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Trust shall pay to the Custodian
such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses and
disbursements.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board of the Trust,
the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form
for transfer, all securities then held by it hereunder for each Fund and
shall transfer to separate accounts of the successor custodian all of
each Fund's securities held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board
of the Trust, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board shall have been delivered to the
Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank
or trust company, which is a "bank" as defined in the 1940 Act, (delete
"doing business ... Massachusetts" unless SSBT is the Custodian) doing
business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $100,000,000, all securities, funds
and other properties held by the Custodian and all instruments held by
the Custodian relative thereto and all other property held by it under
this Contract for each Fund and to transfer to separate accounts of
such successor custodian all of each Fund's securities held in any
Securities System. Thereafter, such bank or trust company shall be the
successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing
to failure of the Trust to procure the certified copy of the vote
referred to or of the Board to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services during
such period as the Custodian retains possession of such securities,
funds and other properties and the provisions of this Contract relating
to the duties and obligations of the Custodian shall remain in full
force and effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and the
Trust may from time to time agree on such provisions interpretive of or
in addition to the provisions of this Contract as may in their joint
opinion be consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in a writing signed by
both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable
federal or state regulations or any provision of the Declaration of
Trust/Articles of Incorporation. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to
be an amendment of this Contract.
12. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
13. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the
Custodian at address for SSBT only: 225 Franklin Street, Boston,
Massachusetts, 02110, or to such other address as the Trust or the
Custodian may hereafter specify, shall be deemed to have been properly
delivered or given hereunder to the respective address.
14. Counterparts.
This Contract may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
15. Limitations of Liability.
The Custodian is expressly put on notice of the limitation of liability
as set forth in Article XI of the Declaration of Trust of those Trusts
which are business trusts and agrees that the obligations and
liabilities assumed by the Trust and any Fund pursuant to this Contract,
including, without limitation, any obligation or liability to indemnify
the Custodian pursuant to Section 8 hereof, shall be limited in any case
to the relevant Fund and its assets and that the Custodian shall not
seek satisfaction of any such obligation from the shareholders of the
relevant Fund, from any other Fund or its shareholders or from the
Trustees, Officers, employees or agents of the Trust, or any of them.
In addition, in connection with the discharge and satisfaction of any
claim made by the Custodian against the Trust, for whatever reasons,
involving more than one Fund, the Trust shall have the exclusive right
to determine the appropriate allocations of liability for any such claim
between or among the Funds.

IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed effective as of the 1st day of December, 1993.

ATTEST: INVESTMENT COMPANIES

/s/John G. McGonigle_________ By /s/John G. Donahue_____________
John G. McGonigle John F. Donahue
Secretary Chairman

ATTEST: STATE STREET BANK AND TRUST
COMPANY

/s/ Ed McKenzie______________ By /s/ F. J. Sidoti, Jr.___________
(Assistant) Secretary Typed Name: Frank J. Sidoti, Jr.
Typed Name: Ed McKenzie Title: Vice President

ATTEST: FEDERATED SERVICES COMPANY

/s/ Jeannette Fisher-Garber______ By /s/ James J. Dolan________________
Jeannette Fisher-Garber James J. Dolan
Secretary President

EXHIBIT 1
<TABLE>
<S> <C>
CONTRACT
DATE INVESTMENT COMPANY

12/01/94 Tax-Free Instruments Trust
Investment Shares
Institutional Service Shares
</TABLE>

Exhibit 9(i) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

AGREEMENT
for
FUND ACCOUNTING,
SHAREHOLDER RECORDKEEPING,
and
CUSTODY SERVICES PROCUREMENT

AGREEMENT made as of December 1, 1994, by and between those investment
companies listed on Exhibit 1 as may be amended from time to time, having
their principal office and place of business at Federated Investors Tower,
Pittsburgh, PA 15222-3779 (the "Trust"), on behalf of the portfolios
(individually referred to herein as a "Fund" and collectively as "Funds") of
the Trust, and FEDERATED SERVICES COMPANY, a Delaware business trust, having
its principal office and place of business at Federated Investors Tower,
Pittsburgh, Pennsylvania 15222-3779 (the "Company").
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act"),
with authorized and issued shares of capital stock or beneficial interest
("Shares"); and
WHEREAS, the Trust may desire to retain the Company to provide certain
pricing, accounting and recordkeeping services for each of the Funds,
including any classes of shares issued by any Fund ("Classes") if so indicated
on Exhibit 1, and the Company is willing to furnish such services; and
WHEREAS, the Trust may desire to appoint the Company as its transfer agent,
dividend disbursing agent if so indicated on Exhibit 1, and agent in
connection with certain other activities, and the Company desires to accept
such appointment; and
WHEREAS, the Trust may desire to appoint the Company as its agent to
select, negotiate and subcontract for custodian services from an approved list
of qualified banks if so indicated on Exhibit 1, and the Company desires to
accept such appointment; and
WHEREAS, from time to time the Trust may desire and may instruct the
Company to subcontract for the performance of certain of its duties and
responsibilities hereunder to State Street Bank and Trust Company or another
agent (the "Agent"); and
WHEREAS, the words Trust and Fund may be used interchangeably for those
investment companies consisting of only one portfolio;
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, and intending to be legally bound hereby, the parties hereto agree
as follows:
SECTION ONE: Fund Accounting.
Article 1. Appointment.
The Trust hereby appoints the Company to provide certain pricing and
accounting services to the Funds, and/or the Classes, for the period and on
the terms set forth in this Agreement. The Company accepts such appointment
and agrees to furnish the services herein set forth in return for the
compensation as provided in Article 3 of this Section.
Article 2. The Company's Duties.
Subject to the supervision and control of the Trust's Board of Trustees or
Directors ("Board"), the Company will assist the Trust with regard to fund
accounting for the Trust, and/or the Funds, and/or the Classes, and in
connection therewith undertakes to perform the following specific services;
A. Value the assets of the Funds using: primarily, market quotations,
including the use of matrix pricing, supplied by the independent
pricing services selected by the Company in consultation with the
adviser, or sources selected by the adviser, and reviewed by the
board; secondarily, if a designated pricing service does not provide a
price for a security which the Company believes should be available by
market quotation, the Company may obtain a price by calling brokers
designated by the investment adviser of the fund holding the security,
or if the adviser does not supply the names of such brokers, the
Company will attempt on its own to find brokers to price those
securities; thirdly, for securities for which no market price is
available, the Pricing Committee of the Board will determine a fair
value in good faith. Consistent with Rule 2a-4 of the 40 Act,
estimates may be used where necessary or appropriate. The Company's
obligations with regard to the prices received from outside pricing
services and designated brokers or other outside sources, is to
exercise reasonable care in the supervision of the pricing agent. The
Company is not the guarantor of the securities prices received from
such agents and the Company is not liable to the Fund for potential
errors in valuing a Fund's assets or calculating the net asset value
per share of such Fund or Class when the calculations are based upon
such prices. All of the above sources of prices used as described are
deemed by the Company to be authorized sources of security prices. The
Company provides daily to the adviser the securities prices used in
calculating the net asset value of the fund, for its use in preparing
exception reports for those prices on which the adviser has comment.
Further, upon receipt of the exception reports generated by the
adviser, the Company diligently pursues communication regarding
exception reports with the designated pricing agents.
B. Determine the net asset value per share of each Fund and/or Class, at
the time and in the manner from time to time determined by the Board
and as set forth in the Prospectus and Statement of Additional
Information ("Prospectus") of each Fund;
C. Calculate the net income of each of the Funds, if any;
D. Calculate capital gains or losses of each of the Funds resulting from
sale or disposition of assets, if any;
E. Maintain the general ledger and other accounts, books and financial
records of the Trust, including for each Fund, and/or Class, as
required under Section 31(a) of the 1940 Act and the Rules thereunder
in connection with the services provided by the Company;
F. Preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records to be maintained by Rule 31a-1 under the 1940 Act in
connection with the services provided by the Company. The Company
further agrees that all such records it maintains for the Trust are
the property of the Trust and further agrees to surrender promptly to
the Trust such records upon the Trust's request;
G. At the request of the Trust, prepare various reports or other financial
documents required by federal, state and other applicable laws and
regulations; and
H. Such other similar services as may be reasonably requested by the
Trust.
Article 3. Compensation and Allocation of Expenses.
A. The Funds will compensate the Company for its services rendered
pursuant to Section One of this Agreement in accordance with the fees
agreed upon from time to time between the parties hereto. Such fees do
not include out-of-pocket disbursements of the Company for which the
Funds shall reimburse the Company upon receipt of a separate invoice.
Out-of-pocket disbursements shall include, but shall not be limited
to, the items agreed upon between the parties from time to time.
B. The Fund and/or the Class, and not the Company, shall bear the cost of:
custodial expenses; membership dues in the Investment Company
Institute or any similar organization; transfer agency expenses;
investment advisory expenses; costs of printing and mailing stock
certificates, Prospectuses, reports and notices; administrative
expenses; interest on borrowed money; brokerage commissions; taxes and
fees payable to federal, state and other governmental agencies; fees
of Trustees or Directors of the Trust; independent auditors expenses;
Federated Administrative Services and/or Federated Administrative
Services, Inc. legal and audit department expenses billed to Federated
Services Company for work performed related to the Trust, the Funds,
or the Classes; law firm expenses; or other expenses not specified in
this Article 3 which may be properly payable by the Funds and/or
classes.
C. The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than monthly,
and shall be paid daily upon request of the Company. The Company will
maintain detailed information about the compensation and out-of-pocket
expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Trust and/or the Funds and a duly authorized officer of
the Company.
E. The fee for the period from the effective date of this Agreement with
respect to a Fund or a Class to the end of the initial month shall be
prorated according to the proportion that such period bears to the
full month period. Upon any termination of this Agreement before the
end of any month, the fee for such period shall be prorated according
to the proportion which such period bears to the full month period.
For purposes of determining fees payable to the Company, the value of
the Fund's net assets shall be computed at the time and in the manner
specified in the Fund's Prospectus.
F. The Company, in its sole discretion, may from time to time subcontract
to, employ or associate with itself such person or persons as the
Company may believe to be particularly suited to assist it in
performing services under this Section One. Such person or persons may
be third-party service providers, or they may be officers and
employees who are employed by both the Company and the Funds. The
compensation of such person or persons shall be paid by the Company
and no obligation shall be incurred on behalf of the Trust, the Funds,
or the Classes in such respect.
SECTION TWO: Shareholder Recordkeeping.
Article 4. Terms of Appointment.
Subject to the terms and conditions set forth in this Agreement, the Trust
hereby appoints the Company to act as, and the Company agrees to act as,
transfer agent and dividend disbursing agent for each Fund's Shares, and agent
in connection with any accumulation, open-account or similar plans provided to
the shareholders of any Fund ("Shareholder(s)"), including without limitation
any periodic investment plan or periodic withdrawal program.
As used throughout this Agreement, a "Proper Instruction" means a writing
signed or initialed by one or more person or persons as the Board shall have
from time to time authorized. Each such writing shall set forth the specific
transaction or type of transaction involved. Oral instructions will be deemed
to be Proper Instructions if (a) the Company reasonably believes them to have
been given by a person previously authorized in Proper Instructions to give
such instructions with respect to the transaction involved, and (b) the Trust,
or the Fund, and the Company promptly cause such oral instructions to be
confirmed in writing. Proper Instructions may include communications effected
directly between electro-mechanical or electronic devices provided that the
Trust, or the Fund, and the Company are satisfied that such procedures afford
adequate safeguards for the Fund's assets. Proper Instructions may only be
amended in writing.
Article 5. Duties of the Company.
The Company shall perform the following services in accordance with Proper
Instructions as may be provided from time to time by the Trust as to any Fund:
A. Purchases
(1) The Company shall receive orders and payment for the purchase of
shares and promptly deliver payment and appropriate
documentation therefore to the custodian of the relevant Fund,
(the "Custodian"). The Company shall notify the Fund and the
Custodian on a daily basis of the total amount of orders and
payments so delivered.
(2) Pursuant to purchase orders and in accordance with the Fund's
current Prospectus, the Company shall compute and issue the
appropriate number of Shares of each Fund and/or Class and hold
such Shares in the appropriate Shareholder accounts.
(3) For certificated Funds and/or Classes, if a Shareholder or its
agent requests a certificate, the Company, as Transfer Agent,
shall countersign and mail by first class mail, a certificate to
the Shareholder at its address as set forth on the transfer
books of the Funds, and/or Classes, subject to any Proper
Instructions regarding the delivery of certificates.
(4) In the event that any check or other order for the purchase of
Shares of the Fund and/or Class is returned unpaid for any
reason, the Company shall debit the Share account of the
Shareholder by the number of Shares that had been credited to
its account upon receipt of the check or other order, promptly
mail a debit advice to the Shareholder, and notify the Fund
and/or Class of its action. In the event that the amount paid
for such Shares exceeds proceeds of the redemption of such
Shares plus the amount of any dividends paid with respect to
such Shares, the Fund and/the Class or its distributor will
reimburse the Company on the amount of such excess.
B. Distribution
(1) Upon notification by the Funds of the declaration of any
distribution to Shareholders, the Company shall act as Dividend
Disbursing Agent for the Funds in accordance with the provisions
of its governing document and the then-current Prospectus of the
Fund. The Company shall prepare and mail or credit income,
capital gain, or any other payments to Shareholders. As the
Dividend Disbursing Agent, the Company shall, on or before the
payment date of any such distribution, notify the Custodian of
the estimated amount required to pay any portion of said
distribution which is payable in cash and request the Custodian
to make available sufficient funds for the cash amount to be
paid out. The Company shall reconcile the amounts so requested
and the amounts actually received with the Custodian on a daily
basis. If a Shareholder is entitled to receive additional Shares
by virtue of any such distribution or dividend, appropriate
credits shall be made to the Shareholder's account, for
certificated Funds and/or Classes, delivered where requested;
and
(2) The Company shall maintain records of account for each Fund and
Class and advise the Trust, each Fund and Class and its
Shareholders as to the foregoing.
C. Redemptions and Transfers
(1) The Company shall receive redemption requests and redemption
directions and, if such redemption requests comply with the
procedures as may be described in the Fund Prospectus or set
forth in Proper Instructions, deliver the appropriate
instructions therefor to the Custodian. The Company shall notify
the Funds on a daily basis of the total amount of redemption
requests processed and monies paid to the Company by the
Custodian for redemptions.
(2) At the appropriate time upon receiving redemption proceeds from
the Custodian with respect to any redemption, the Company shall
pay or cause to be paid the redemption proceeds in the manner
instructed by the redeeming Shareholders, pursuant to procedures
described in the then-current Prospectus of the Fund.
(3) If any certificate returned for redemption or other request for
redemption does not comply with the procedures for redemption
approved by the Fund, the Company shall promptly notify the
Shareholder of such fact, together with the reason therefor, and
shall effect such redemption at the price applicable to the date
and time of receipt of documents complying with said procedures.
(4) The Company shall effect transfers of Shares by the registered
owners thereof.
(5) The Company shall identify and process abandoned accounts and
uncashed checks for state escheat requirements on an annual
basis and report such actions to the Fund.
D. Recordkeeping
(1) The Company shall record the issuance of Shares of each Fund,
and/or Class, and maintain pursuant to applicable rules of the
Securities and Exchange Commission ("SEC") a record of the total
number of Shares of the Fund and/or Class which are authorized,
based upon data provided to it by the Fund, and issued and
outstanding. The Company shall also provide the Fund on a
regular basis or upon reasonable request with the total number
of Shares which are authorized and issued and outstanding, but
shall have no obligation when recording the issuance of Shares,
except as otherwise set forth herein, to monitor the issuance of
such Shares or to take cognizance of any laws relating to the
issue or sale of such Shares, which functions shall be the sole
responsibility of the Funds.
(2) The Company shall establish and maintain records pursuant to
applicable rules of the SEC relating to the services to be
performed hereunder in the form and manner as agreed to by the
Trust or the Fund to include a record for each Shareholder's
account of the following:
(a) Name, address and tax identification number (and whether
such number has been certified);
(b) Number of Shares held;
(c) Historical information regarding the account, including
dividends paid and date and price for all transactions;
(d) Any stop or restraining order placed against the account;
(e) Information with respect to withholding in the case of a
foreign account or an account for which withholding is
required by the Internal Revenue Code;
(f) Any dividend reinvestment order, plan application, dividend
address and correspondence relating to the current
maintenance of the account;
(g) Certificate numbers and denominations for any Shareholder
holding certificates;
(h) Any information required in order for the Company to
perform the calculations contemplated or required by this
Agreement.
(3) The Company shall preserve any such records required to be
maintained pursuant to the rules of the SEC for the periods
prescribed in said rules as specifically noted below. Such
record retention shall be at the expense of the Company, and
such records may be inspected by the Fund at reasonable times.
The Company may, at its option at any time, and shall forthwith
upon the Fund's demand, turn over to the Fund and cease to
retain in the Company's files, records and documents created and
maintained by the Company pursuant to this Agreement, which are
no longer needed by the Company in performance of its services
or for its protection. If not so turned over to the Fund, such
records and documents will be retained by the Company for six
years from the year of creation, during the first two of which
such documents will be in readily accessible form. At the end of
the six year period, such records and documents will either be
turned over to the Fund or destroyed in accordance with Proper
Instructions.
E. Confirmations/Reports
(1) The Company shall furnish to the Fund periodically the following
information:
(a) A copy of the transaction register;
(b) Dividend and reinvestment blotters;
(c) The total number of Shares issued and outstanding in each
state for "blue sky" purposes as determined according to
Proper Instructions delivered from time to time by the
Fund to the Company;
(d) Shareholder lists and statistical information;
(e) Payments to third parties relating to distribution
agreements, allocations of sales loads, redemption fees,
or other transaction- or sales-related payments;
(f) Such other information as may be agreed upon from time to
time.
(2) The Company shall prepare in the appropriate form, file with the
Internal Revenue Service and appropriate state agencies, and, if
required, mail to Shareholders, such notices for reporting
dividends and distributions paid as are required to be so filed
and mailed and shall withhold such sums as are required to be
withheld under applicable federal and state income tax laws,
rules and regulations.
(3) In addition to and not in lieu of the services set forth above,
the Company shall:
(a) Perform all of the customary services of a transfer agent,
dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar
plans (including without limitation any periodic
investment plan or periodic withdrawal program), including
but not limited to: maintaining all Shareholder accounts,
mailing Shareholder reports and Prospectuses to current
Shareholders, withholding taxes on accounts subject to
back-up or other withholding (including non-resident alien
accounts), preparing and filing reports on U.S. Treasury
Department Form 1099 and other appropriate forms required
with respect to dividends and distributions by federal
authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of Shares
and other conformable transactions in Shareholder
accounts, preparing and mailing activity statements for
Shareholders, and providing Shareholder account
information; and
(b) provide a system which will enable the Fund to monitor the
total number of Shares of each Fund and/or Class sold in
each state ("blue sky reporting"). The Fund shall by
Proper Instructions (i) identify to the Company those
transactions and assets to be treated as exempt from the
blue sky reporting for each state and (ii) verify the
classification of transactions for each state on the
system prior to activation and thereafter monitor the
daily activity for each state. The responsibility of the
Company for each Fund's and/or Class's state blue sky
registration status is limited solely to the recording of
the initial classification of transactions or accounts
with regard to blue sky compliance and the reporting of
such transactions and accounts to the Fund as provided
above.
F. Other Duties
(1) The Company shall answer correspondence from Shareholders
relating to their Share accounts and such other correspondence
as may from time to time be addressed to the Company;
(2) The Company shall prepare Shareholder meeting lists, mail proxy
cards and other material supplied to it by the Fund in
connection with Shareholder Meetings of each Fund; receive,
examine and tabulate returned proxies, and certify the vote of
the Shareholders;
(3) The Company shall establish and maintain facilities and
procedures for safekeeping of stock certificates, check forms
and facsimile signature imprinting devices, if any; and for the
preparation or use, and for keeping account of, such
certificates, forms and devices.
Article 6. Duties of the Trust.
A. Compliance
The Trust or Fund assume full responsibility for the preparation,
contents and distribution of their own and/or their classes'
Prospectus and for complying with all applicable requirements of the
Securities Act of 1933, as amended (the "1933 Act"), the 1940 Act and
any laws, rules and regulations of government authorities having
jurisdiction.
B. Share Certificates
The Trust shall supply the Company with a sufficient supply of blank
Share certificates and from time to time shall renew such supply upon
request of the Company. Such blank Share certificates shall be
properly signed, manually or by facsimile, if authorized by the Trust
and shall bear the seal of the Trust or facsimile thereof; and
notwithstanding the death, resignation or removal of any officer of
the Trust authorized to sign certificates, the Company may continue to
countersign certificates which bear the manual or facsimile signature
of such officer until otherwise directed by the Trust.
C. Distributions
The Fund shall promptly inform the Company of the declaration of any
dividend or distribution on account of any Fund's shares.
Article 7. Compensation and Expenses.
A. Annual Fee
For performance by the Company pursuant to Section Two of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual maintenance fee for each Shareholder account as agreed upon
between the parties and as may be added to or amended from time to
time. Such fees may be changed from time to time subject to written
agreement between the Trust and the Company. Pursuant to information
in the Fund Prospectus or other information or instructions from the
Fund, the Company may sub-divide any Fund into Classes or other sub-
components for recordkeeping purposes. The Company will charge the
Fund the same fees for each such Class or sub-component the same as if
each were a Fund.
B. Reimbursements
In addition to the fee paid under Article 7A above, the Trust and/or
Fund agree to reimburse the Company for out-of-pocket expenses or
advances incurred by the Company for the items agreed upon between the
parties, as may be added to or amended from time to time. In addition,
any other expenses incurred by the Company at the request or with the
consent of the Trust and/or the Fund, will be reimbursed by the
appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than monthly,
and shall be paid daily upon request of the Company. The Company will
maintain detailed information about the compensation and out-of-pocket
expenses by Fund and Class.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Trust and/or the Funds and a duly authorized officer of
the Company.
Article 8. Assignment of Shareholder Recordkeeping.
Except as provided below, no right or obligation under this Section Two may
be assigned by either party without the written consent of the other party.
A. This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns.
B. The Company may without further consent on the part of the Trust
subcontract for the performance hereof with (A) State Street Bank and
its subsidiary, Boston Financial Data Services, Inc., a Massachusetts
Trust ("BFDS"), which is duly registered as a transfer agent pursuant
to Section 17A(c)(1) of the Securities Exchange Act of 1934, as
amended, or any succeeding statute ("Section 17A(c)(1)"), or (B) a
BFDS subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(1), or (C) a BFDS affiliate, or (D) such other provider
of services duly registered as a transfer agent under Section
17A(c)(1) as Company shall select; provided, however, that the Company
shall be as fully responsible to the Trust for the acts and omissions
of any subcontractor as it is for its own acts and omissions; or
C. The Company shall upon instruction from the Trust subcontract for the
performance hereof with an Agent selected by the Trust, other than
BFDS or a provider of services selected by Company, as described in
(2) above; provided, however, that the Company shall in no way be
responsible to the Trust for the acts and omissions of the Agent.
SECTION THREE: Custody Services Procurement.
Article 9. Appointment.
The Trust hereby appoints Company as its agent to evaluate and obtain
custody services from a financial institution that (i) meets the criteria
established in Section 17(f) of the 1940 Act and (ii) has been approved by the
Board as eligible for selection by the Company as a custodian (the "Eligible
Custodian"). The Company accepts such appointment.
Article 10. The Company and Its Duties.
Subject to the review, supervision and control of the Board, the Company
shall:
A. evaluate the nature and the quality of the custodial services provided
by the Eligible Custodian;
B. employ the Eligible Custodian to serve on behalf of the Trust as
Custodian of the Trust's assets substantially on the terms set forth
as the form of agreement in Exhibit 2;
C. negotiate and enter into agreements with the Custodians for the benefit
of the Trust, with the Trust as a party to each such agreement. The
Company shall not be a party to any agreement with any such Custodian;
D. establish procedures to monitor the nature and the quality of the
services provided by the Custodians;
E. continuously monitor the nature and the quality of services provided by
the Custodians; and
F. periodically provide to the Trust (i) written reports on the activities
and services of the Custodians; (ii) the nature and amount of
disbursement made on account of the Trust with respect to each
custodial agreement; and (iii) such other information as the Board
shall reasonably request to enable it to fulfill its duties and
obligations under Sections 17(f) and 36(b) of the 1940 Act and other
duties and obligations thereof.
Article 11. Fees and Expenses.
A. Annual Fee
For the performance by the Company pursuant to Section Three of this
Agreement, the Trust and/or the Fund agree to pay the Company an
annual fee as agreed upon between the parties.
B. Reimbursements
In addition to the fee paid under Section 11A above, the Trust and/or
Fund agree to reimburse the Company for out-of-pocket expenses or
advances incurred by the Company for the items agreed upon between the
parties, as may be added to or amended from time to time. In addition,
any other expenses incurred by the Company at the request or with the
consent of the Trust and/or the Fund, will be reimbursed by the
appropriate Fund.
C. Payment
The compensation and out-of-pocket expenses shall be accrued by the
Fund and shall be paid to the Company no less frequently than monthly,
and shall be paid daily upon request of the Company. The Company will
maintain detailed information about the compensation and out-of-pocket
expenses by Fund.
D. Any schedule of compensation agreed to hereunder, as may be adjusted
from time to time, shall be dated and signed by a duly authorized
officer of the Trust and/or the Funds and a duly authorized officer of
the Company.
Article 12. Representations.
The Company represents and warrants that it has obtained all required
approvals from all government or regulatory authorities necessary to enter
into this arrangement and to provide the services contemplated in Section
Three of this Agreement.
SECTION FOUR: General Provisions.
Article 13. Documents.
A. In connection with the appointment of the Company under this Agreement,
the Trust shall file with the Company the following documents:
(1) A copy of the Charter and By-Laws of the Trust and all amendments
thereto;
(2) A copy of the resolution of the Board of the Trust authorizing
this Agreement;
(3) Specimens of all forms of outstanding Share certificates of the
Trust or the Funds in the forms approved by the Board of the
Trust with a certificate of the Secretary of the Trust as to
such approval;
(4) All account application forms and other documents relating to
Shareholders accounts; and
(5) A copy of the current Prospectus for each Fund.
B. The Fund will also furnish from time to time the following documents:
(1) Each resolution of the Board of the Trust authorizing the
original issuance of each Fund's, and/or Class's Shares;
(2) Each Registration Statement filed with the SEC and amendments
thereof and orders relating thereto in effect with respect to
the sale of Shares of any Fund, and/or Class;
(3) A certified copy of each amendment to the governing document and
the By-Laws of the Trust;
(4) Certified copies of each vote of the Board authorizing officers
to give Proper Instructions to the Custodian and agents for fund
accountant, custody services procurement, and shareholder
recordkeeping or transfer agency services;
(5) Specimens of all new Share certificates representing Shares of
any Fund, accompanied by Board resolutions approving such forms;
(6) Such other certificates, documents or opinions which the Company
may, in its discretion, deem necessary or appropriate in the
proper performance of its duties; and
(7) Revisions to the Prospectus of each Fund.
Article 14. Representations and Warranties.
A. Representations and Warranties of the Company
The Company represents and warrants to the Trust that:
(1) It is a business trust duly organized and existing and in good
standing under the laws of the State of Delaware.
(2) It is duly qualified to carry on its business in the State of
Delaware.
(3) It is empowered under applicable laws and by its charter and by-
laws to enter into and perform this Agreement.
(4) All requisite corporate proceedings have been taken to authorize
it to enter into and perform its obligations under this
Agreement.
(5) It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement.
(6) It is in compliance with federal securities law requirements and
in good standing as a transfer agent.
B. Representations and Warranties of the Trust
The Trust represents and warrants to the Company that:
(1) It is an investment company duly organized and existing and in
good standing under the laws of its state of organization;
(2) It is empowered under applicable laws and by its Charter and By-
Laws to enter into and perform its obligations under this
Agreement;
(3) All corporate proceedings required by said Charter and By-Laws
have been taken to authorize it to enter into and perform its
obligations under this Agreement;
(4) The Trust is an open-end investment company registered under the
1940 Act; and
(5) A registration statement under the 1933 Act will be effective,
and appropriate state securities law filings have been made and
will continue to be made, with respect to all Shares of each
Fund being offered for sale.
Article 15. Standard of Care and Indemnification.
A. Standard of Care
The Company shall be held to a standard of reasonable care in carrying
out the provisions of this Contract. The Company shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the
Trust) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice, provided that
such action is not in violation of applicable federal or state laws or
regulations, and is in good faith and without negligence.
B. Indemnification by Trust
The Company shall not be responsible for and the Trust or Fund shall
indemnify and hold the Company, including its officers, directors,
shareholders and their agents employees and affiliates, harmless
against any and all losses, damages, costs, charges, counsel fees,
payments, expenses and liabilities arising out of or attributable to:
(1) The acts or omissions of any Custodian, Adviser, Sub-adviser or
other party contracted by or approved by the Trust or Fund,
(2) The reliance on or use by the Company or its agents or
subcontractors of information, records and documents in proper
form which
(a) are received by the Company or its agents or subcontractors
and furnished to it by or on behalf of the Fund, its
Shareholders or investors regarding the purchase,
redemption or transfer of Shares and Shareholder account
information;
(b) are received by the Company from independent pricing
services or sources for use in valuing the assets of the
Funds; or
(c) are received by the Company or its agents or subcontractors
from Advisers, Sub-advisers or other third parties
contracted by or approved by the Trust of Fund for use in
the performance of services under this Agreement;
(d) have been prepared and/or maintained by the Fund or its
affiliates or any other person or firm on behalf of the
Trust.
(3) The reliance on, or the carrying out by the Company or its agents
or subcontractors of Proper Instructions of the Trust or the
Fund.
(4) The offer or sale of Shares in violation of any requirement under
the federal securities laws or regulations or the securities
laws or regulations of any state that such Shares be registered
in such state or in violation of any stop order or other
determination or ruling by any federal agency or any state with
respect to the offer or sale of such Shares in such state.
Provided, however, that the Company shall not be protected by
this Article 15.A. from liability for any act or omission
resulting from the Company's willful misfeasance, bad faith,
negligence or reckless disregard of its duties of failure to
meet the standard of care set forth in 15.A. above.
C. Reliance
At any time the Company may apply to any officer of the Trust or Fund
for instructions, and may consult with legal counsel with respect to
any matter arising in connection with the services to be performed by
the Company under this Agreement, and the Company and its agents or
subcontractors shall not be liable and shall be indemnified by the
Trust or the appropriate Fund for any action reasonably taken or
omitted by it in reliance upon such instructions or upon the opinion
of such counsel provided such action is not in violation of applicable
federal or state laws or regulations. The Company, its agents and
subcontractors shall be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual
or facsimile signatures of the officers of the Trust or the Fund, and
the proper countersignature of any former transfer agent or registrar,
or of a co-transfer agent or co-registrar.
D. Notification
In order that the indemnification provisions contained in this
Article 15 shall apply, upon the assertion of a claim for which either
party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such
assertion, and shall keep the other party advised with respect to all
developments concerning such claim. The party who may be required to
indemnify shall have the option to participate with the party seeking
indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any
compromise in any case in which the other party may be required to
indemnify it except with the other party's prior written consent.
Article 16. Termination of Agreement.
This Agreement may be terminated by either party upon one hundred twenty
(120) days written notice to the other. Should the Trust exercise its rights
to terminate, all out-of-pocket expenses associated with the movement of
records and materials will be borne by the Trust or the appropriate Fund.
Additionally, the Company reserves the right to charge for any other
reasonable expenses associated with such termination. The provisions of
Article 15 shall survive the termination of this Agreement.
Article 17. Amendment.
This Agreement may be amended or modified by a written agreement executed
by both parties.
Article 18. Interpretive and Additional Provisions.
In connection with the operation of this Agreement, the Company and the
Trust may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint opinion be
consistent with the general tenor of this Agreement. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall
be annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision
of the Charter. No interpretive or additional provisions made as provided in
the preceding sentence shall be deemed to be an amendment of this Agreement.
Article 19. Governing Law.
This Agreement shall be construed and the provisions hereof interpreted
under and in accordance with the laws of the Commonwealth of Massachusetts
Article 20. Notices.
Except as otherwise specifically provided herein, Notices and other
writings delivered or mailed postage prepaid to the Trust at Federated
Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to the Company at
Federated Investors Tower, Pittsburgh, Pennsylvania, 15222-3779, or to such
other address as the Trust or the Company may hereafter specify, shall be
deemed to have been properly delivered or given hereunder to the respective
address.
Article 21. Counterparts.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original.
Article 22. Limitations of Liability of Trustees and Shareholders of the Trust.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Trust and signed by an authorized officer of the Trust, acting
as such, and neither such authorization by such Trustees nor such execution
and delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the Trustees or
Shareholders of the Trust, but bind only the appropriate property of the Fund,
or Class, as provided in the Declaration of Trust.
Article 23. Limitations of Liability of Trustees and Shareholders of
the Company.
The execution and delivery of this Agreement have been authorized by the
Trustees of the Company and signed by an authorized officer of the Company,
acting as such, and neither such authorization by such Trustees nor such
execution and delivery by such officer shall be deemed to have been made by
any of them individually or to impose any liability on any of them personally,
and the obligations of this Agreement are not binding upon any of the Trustees
or Shareholders of the Company, but bind only the property of the Company as
provided in the Declaration of Trust.
Article 24. Assignment.
This Agreement and the rights and duties hereunder shall not be assignable
with respect to the Trust or the Funds by either of the parties hereto except
by the specific written consent of the other party.
Article 25. Merger of Agreement.
This Agreement constitutes the entire agreement between the parties hereto
and supersedes any prior agreement with respect to the subject hereof whether
oral or written.
Article 26. Successor Agent.
If a successor agent for the Trust shall be appointed by the Trust, the
Company shall upon termination of this Agreement deliver to such successor
agent at the office of the Company all properties of the Trust held by it
hereunder. If no such successor agent shall be appointed, the Company shall at
its office upon receipt of Proper Instructions deliver such properties in
accordance with such instructions.
In the event that no written order designating a successor agent or Proper
Instructions shall have been delivered to the Company on or before the date
when such termination shall become effective, then the Company shall have the
right to deliver to a bank or trust company, which is a "bank" as defined in
the 1940 Act, of its own selection, having an aggregate capital, surplus, and
undivided profits, as shown by its last published report, of not less than
$2,000,000, all properties held by the Company under this Agreement.
Thereafter, such bank or trust company shall be the successor of the Company
under this Agreement.
Article 27. Force Majeure.
The Company shall have no liability for cessation of services hereunder or
any damages resulting therefrom to the Fund as a result of work stoppage,
power or other mechanical failure, natural disaster, governmental action,
communication disruption or other impossibility of performance.
Article 28. Assignment; Successors.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign to a
successor all of or a substantial portion of its business, or to a party
controlling, controlled by, or under common control with such party. Nothing
in this Article 28 shall prevent the Company from delegating its
responsibilities to another entity to the extent provided herein.
Article 29. Severability.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.

ATTEST: INVESTMENT COMPANIES
(listed on Exhibit 1)

/s/ John W. McGonigle_______ By:__/s/ John F. Donahue___
John W. McGonigle John F. Donahue
Secretary Chairman

ATTEST: FEDERATED SERVICES COMPANY

/s/ Jeannette Fisher-Garber By:_/s/ James J. Dolan_____
Jeannette Fisher-Garber James J. Dolan
Secretary President

EXHIBIT 1
<TABLE>
<S> <C>
CONTRACT
DATE INVESTMENT COMPANY
Portfolios
Classes

12/01/94 TAX-FREE INSTRUMENTS TRUST
Investment Shares
Institutional Service Shares

FEDERATED SERVICES COMPANY provides the following services:
Fund Accounting
Shareholder Recordkeeping
Custody Services Procurement

</TABLE>

Exhibit 9(iii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

ADMINISTRATIVE SERVICES AGREEMENT

This Administrative Services Agreement is made as of this first day of
March, 1994, between those investment companies listed on Exhibit 1, as may be
amended from time to time, having their principal office and place of business
at Federated Investors Tower, Pittsburgh PA 15222-3779 (individually referred
to herein as "Fund" and collectively referred to as "Funds), on behalf of the
portfolios of the Funds, and Federated Administrative Services, a Delaware
business trust (herein called "FAS").
WHEREAS, the Funds desire to retain FAS as their Administrator to provide
them with Administrative Services (as herein defined), and FAS is willing to
render such services;
WHEREAS, the Funds are registered as open-end management investment
companies under the Investment Company Act of 1940, as amended (the "1940
Act"), with authorized and issued shares of capital stock or beneficial
interest ("Shares"); and
NOW, THEREFORE, in consideration of the premises and mutual covenants set
forth herein, the parties hereto agree as follows:
1. Appointment of Administrator. The Funds hereby appoint FAS as
Administrator of the Funds on the terms and conditions set forth in this
Agreement; and FAS hereby accepts such appointment and agrees to perform the
services and duties set forth in Section 2 of this Agreement in consideration
of the compensation provided for in Section 4 hereof.
2. Services and Duties. As Administrator, and subject to the supervision
and control of the Funds' Boards of Trustees or Directors, as applicable (the
"Boards"), FAS will provide facilities, equipment, and personnel to carry out
the following administrative services for operation of the business and affairs
of the Funds and each of their portfolios:
(a) prepare, file, and maintain the Funds' governing documents and any
amendments thereto, including the Declaration of Trust or Articles
of Incorporation, as appropriate,(which has already been prepared
and filed), the By-laws and minutes of meetings of their Boards,
Committees, and shareholders;
(b) prepare and file with the Securities and Exchange Commission and
the appropriate state securities authorities the registration
statements for the Funds and the Funds' shares and all amendments
thereto, reports to regulatory authorities and shareholders,
prospectuses, proxy statements, and such other documents all as
may be necessary to enable the Funds to make continuous offerings
of their shares, as applicable;
(c) prepare, negotiate, and administer contracts on behalf of the
Funds with, among others, each Fund's investment adviser,
distributor, custodian, and transfer agent, subject to any
applicable restrictions of the Boards or the 1940 Act;
(d) supervise the Funds' custodians in the maintenance of the Funds'
general ledgers and in the preparation of the Funds' financial
statements, including oversight of expense accruals and payments,
the determination of the net asset value of the Funds and the
declaration and payment of dividends and other distributions to
shareholders;
(e) calculate performance data of the Funds for dissemination to
information services covering the investment company industry;
(f) prepare and file the Funds' tax returns;
(g) examine and review the operations of the Funds' custodians and
transfer agents;
(h) coordinate the layout and printing of publicly disseminated
prospectuses and reports;
(i) perform internal audit examinations in accordance with a charter
to be adopted by FAS and the Funds;
(j) assist with the design, development, and operation of the Funds;
(k) provide individuals reasonably acceptable to the Funds' Boards for
nomination, appointment, or election as officers of the Funds, who
will be responsible for the management of certain of the Funds'
affairs as determined by the Funds' Boards; and
(l) consult with the Funds and their Boards of Trustees or Directors,
as appropriate, on matters concerning the Funds and their affairs.
The foregoing, along with any additional services that FAS shall agree in
writing to perform for the Funds hereunder, shall hereafter be referred to as
"Administrative Services." Administrative Services shall not include any
duties, functions, or services to be performed for any Fund by such Fund's
investment adviser, distributor, custodian, transfer agent, or shareholder
service agent, pursuant to their respective agreements with such Fund.
3. Expenses. FAS shall be responsible for expenses incurred in providing
office space, equipment, and personnel as may be necessary or convenient to
provide the Administrative Services to the Fund, including the compensation of
FAS employees who serve on the Funds' Boards, or as officers of the Funds.
Each Fund shall be responsible for all other expenses incurred by FAS on behalf
of such Fund, including without limitation postage and courier expenses,
printing expenses, travel expenses, registration fees, filing fees, fees of
outside counsel and independent auditors, insurance premiums, fees payable to
members of such Fund's Board who are not FAS employees, and trade association
dues.
4. Compensation. For the Administrative Services provided, each Fund
hereby agrees to pay and FAS hereby agrees to accept as full compensation for
its services rendered hereunder an administrative fee at an annual rate,
payable daily, as specified below, based upon the total assets of all of the
Funds:
Maximum Administrative Average Daily Net Assets
Fee of the Funds
.150% on the first $250 million
.125% on the next $250 million
.100% on the next $250 million
.075% on assets in excess of $750 million
However, in no event shall the administrative fee received during any
year of this Agreement be less than, or be paid at a rate less than would
aggregate, $125,000, per individual Fund, with an additional $30,000 for each
class of shares added to any such Fund after the date hereof.
5. Standard of Care.
(a) FAS shall not be liable for any error of judgment or mistake of
law or for any loss suffered by any Fund in connection with the
matters to which this Agreement relates, except a loss resulting
from willful misfeasance, bad faith or gross negligence on its
part in the performance of its duties or from reckless disregard
by it of its obligations and duties under this Agreement. FAS
shall be entitled to rely on and may act upon advice of counsel
(who may be counsel for such Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted
pursuant to such advice. Any person, even though also an officer,
trustee, partner, employee or agent of FAS, who may be or become a
member of such Fund's Board, officer, employee or agent of any
Fund, shall be deemed, when rendering services to such Fund or
acting on any business of such Fund (other than services or
business in connection with the duties of FAS hereunder) to be
rendering such services to or acting solely for such Fund and not
as an officer, trustee, partner, employee or agent or one under
the control or direction of FAS even though paid by FAS.
(b) This Section 5 shall survive termination of this Agreement.
6. Duration and Termination. The initial term of this Agreement with
respect to each Fund shall commence on the date hereof, and extend for a period
of one year, renewable annually by the approval of the Board of
Directors/Trustees of each Fund.
7. Amendment. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which an enforcement of the change, waiver, discharge or
termination is sought.
8. Limitations of Liability of Trustees or Officers, Employees, Agents
and Shareholders of the Funds. FAS is expressly put on notice of the
limitation of liability as set forth in the Declaration of Trust of each Fund
that is a Massachusetts business trust and agrees that the obligations assumed
by each such Fund pursuant to this Agreement shall be limited in any case to
such Fund and its assets and that FAS shall not seek satisfaction of any such
obligations from the shareholders of such Fund, the Trustees, Officers,
Employees or Agents of such Fund, or any of them.
9. Limitations of Liability of Trustees and Shareholders of FAS. The
execution and delivery of this Agreement have been authorized by the Trustees
of FAS and signed by an authorized officer of FAS, acting as such, and neither
such authorization by such Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, and the obligations of this
Agreement are not binding upon any of the Trustees or shareholders of FAS, but
bind only the trust property of FAS as provided in the Declaration of Trust of
FAS.
10. Notices. Notices of any kind to be given hereunder shall be in
writing (including facsimile communication) and shall be duly given if
delivered to any Fund at the following address: Federated Investors Tower,
Pittsburgh, PA 15222-3779, Attention: President and if delivered to FAS at
Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention: President.
11. Miscellaneous. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject hereof whether oral or written. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. If
any provision of this Agreement shall be held or made invalid by a court or
regulatory agency decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. Subject to the provisions of Section
5, hereof, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and shall be governed by
Pennsylvania law; provided, however, that nothing herein shall be construed in
a manner inconsistent with the Investment Company Act of 1940 or any rule or
regulation promulgated by the Securities and Exchange Commission thereunder.
12. Counterparts. This Agreement may be executed by different parties
on separate counterparts, each of which, when so executed and delivered, shall
be an original, and all such counterparts shall together constitute one and the
same instrument.
13. Assignment; Successors. This Agreement shall not be assigned by
any party without the prior written consent of FAS, in the case of assignment
by any Fund, or of the Funds, in the case of assignment by FAS, except that any
party may assign to a successor all of or a substantial portion of its business
to a party controlling, controlled by, or under common control with such party.
Nothing in this Section 14 shall prevent FAS from delegating its
responsibilities to another entity to the extent provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.

Investment Companies (listed on Exhibit 1)

By: /s/ John F. Donahue
John F. Donahue
Chairman

Attest: /s/ John W. McGonigle
John W. McGonigle

Federated Administrative Services

By: /s/ Edward C. Gonzales
Edward C. Gonzales
Chairman

Attest: /s/ John W. McGonigle
John W. McGonigle

Exhibit 1
Administrative Services Agreement

Tax-Free Instruments Trust
Investment Shares
Institutional Service Shares

Exhibit 9(ii) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

SHAREHOLDER SERVICES PLAN

This Shareholder Services Plan ("Plan") is adopted as of this 1st day of
March, 1994, by the Boards of Directors or Trustees, as applicable (the
"Boards"), of those investment companies listed on Exhibit 1 hereto as may be
amended from time to time, having their principal office and place of business
at Federated Investors Tower, Pittsburgh, PA 15222-3779 (individually
referred to herein as a "Fund" and collectively as "Funds").
1. This Plan is adopted to allow the Funds to make payments as
contemplated herein to obtain certain personal services for shareholders
and/or the maintenance of shareholder accounts ("Services").
2. This Plan is designed to compensate Federated Shareholder Services
("FSS") for providing personal services and/or the maintenance of shareholder
accounts to the Funds and their shareholders. In compensation for the
services provided pursuant to this Plan, FSS may be paid a monthly fee
computed at the annual rate not to exceed .25 of 1% of the average aggregate
net asset value of the shares of each Fund held during the month.
3. Any payments made by the Funds to FSS pursuant to this Plan will be
made pursuant to a "Shareholder Services Agreement" between FSS and each of
the Funds.
4. Quarterly in each year that this Plan remains in effect, FSS shall
prepare and furnish to the Boards of the Funds, and the Boards shall review, a
written report of the amounts expended under the Plan.
5. This Plan shall become effective with regard to each Fund (i) after
approval by majority votes of: (a) such Fund's Board; and (b) the members of
the Board of such Fund who are not interested persons of such Fund and have no
direct or indirect financial interest in the operation of such Fund's Plan or
in any related documents to the Plan ("Independent Trustees or Directors"),
cast in person at a meeting called for the purpose of voting on the Plan.
6. This Plan shall remain in effect with respect to each Fund presently
set forth on an exhibit and any subsequent Fund added pursuant to an exhibit
during the initial year of this Plan for the period of one year from the date
set forth above and may be continued thereafter if this Plan is approved with
respect to each Fund at least annually by a majority of the relevant Fund's
Board and a majority of the Independent Trustees or
Directors, of such Fund as applicable, cast in person at a meeting
called for the purpose of voting on the renewal of such Plan. If this Plan
is adopted with respect to a fund after the first annual approval by the
Trustees or Directors as described above, this Plan will be effective as to
that Fund at such time as Exhibit 1 hereto is amended to add such Fund and
will continue in effect until the next annual approval of this Plan by the
Funds' Boards and thereafter for successive periods of one year subject to
approval as described above.
7. All material amendments to this Plan must be approved by a vote of
the Board of each Fund and of the Independent Directors or Trustees of such
Fund, cast in person at a meeting called for such purpose.
8. This Plan may be terminated as follows:
(a) at any time, without the payment of any penalty, by the vote of
a majority of the Independent Board Members of any Fund or by a
vote of a majority of the outstanding voting securities of any
Fund as defined in the Investment Company Act of 1940 on sixty
(60) days' written notice to the parties to this Agreement; or
(b) by any party to the Agreement without cause by giving the other
party at least sixty (60) days' written notice of its intention
to terminate.
9. While this Plan shall be in effect, the selection and nomination of
Independent Directors or Trustees of each Fund shall be committed to the
discretion of the Independent Directors or Trustees then in office.
10. All agreements with any person relating to the implementation of
this Plan shall be in writing and any agreement related to this Plan shall be
subject to termination, without penalty, pursuant to the provisions of
Paragraph 8 herein.
11. This Plan shall be construed in accordance with and governed by
the laws of the Commonwealth of Pennsylvania.
Witness the due execution hereof this as of the date set forth above.

Investment Companies (listed on Exhibit 1)

By: /s/ John F. Donahue
John F. Donahue
Chairman

Attest: /s/ John W. McGonigle
John W. McGonigle

Federated Shareholder Services

By: /s/ James J. Dolan

Title: President

Attest: /s/ John W. McGonigle
John W. McGonigle

Exhibit 1
Shareholder Services Plan

Tax-Free Instruments Trust
Investment Shares
Institutional Service Shares

Exhibit 9(iv) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

SHAREHOLDER SERVICES AGREEMENT

AGREEMENT made as of the first day of March, 1994, by and between those
investment companies listed on Exhibit 1, as may be amended from time to time,
having their principal office and place of business at Federated Investors
Tower, Pittsburgh, PA 15222-3779 and who have approved a Shareholder Services
Plan (the "Plan") and this form of Agreement (individually referred to herein
as a "Fund" and collectively as "Funds") and Federated Shareholder Services, a
Delaware business trust, having its principal office and place of business at
Federated Investors Tower, Pittsburgh, Pennsylvania 15222-3779 ("FSS").
1. The Funds hereby appoint FSS to render or cause to be rendered
personal services to shareholders of the Funds and/or the maintenance of
accounts of shareholders of the Funds ("Services"). In addition to providing
Services directly to shareholders of the Funds, FSS is hereby appointed the
Funds' agent to select, negotiate and subcontract for the performance of
Services. FSS hereby accepts such appointments. FSS agrees to provide or
cause to be provided Services which, in its best judgment (subject to
supervision and control of the Funds' Boards of Trustees or Directors, as
applicable), are necessary or desirable for shareholders of the Funds. FSS
further agrees to provide the Funds, upon request, a written description of
the Services which FSS is providing hereunder.
2. During the term of this Agreement, each Fund will pay FSS and FSS
agrees to accept as full compensation for its services rendered hereunder a
fee at an annual rate, calculated daily and payable monthly, up to 0.25% of 1%
of average net assets of each Fund.
For the payment period in which this Agreement becomes effective or
terminates with respect to any Fund, there shall be an appropriate proration
of the monthly fee on the basis of the number of days that this Agreement is
in effect with respect to such Fund during the month. To enable the Funds to
comply with an applicable exemptive order, FSS represents that the fees
received pursuant to this Agreement will be disclosed to and authorized by any
person or entity receiving Services, and will not result in an excessive fee
to FSS.
3. This Agreement shall continue in effect for one year from the date of
its execution, and thereafter for successive periods of one year only if the
form of this Agreement is approved at least annually by the Board of each
Fund, including a majority of the members of the Board of the Fund who are not
interested persons of the Fund and have no direct or indirect financial
interest in the operation of the Funds' Plan or in any related documents to
the Plan ("Independent Board Members") cast in person at a meeting called for
that purpose.
4. Notwithstanding paragraph 3, this Agreement may be terminated as
follows:
(a) at any time, without the payment of any penalty, by the vote of
a majority of the Independent Board Members of any Fund or by a
vote of a majority of the outstanding voting securities of any
Fund as defined in the Investment Company Act of 1940 on sixty
(60) days' written notice to the parties to this Agreement;
(b) automatically in the event of the Agreement's assignment as
defined in the Investment Company Act of 1940; and
(c) by any party to the Agreement without cause by giving the other
party at least sixty (60) days' written notice of its intention
to terminate.
5. FSS agrees to obtain any taxpayer identification number certification
from each shareholder of the Funds to which it provides Services that is
required under Section 3406 of the Internal Revenue Code, and any applicable
Treasury regulations, and to provide each Fund or its designee with timely
written notice of any failure to obtain such taxpayer identification number
certification in order to enable the implementation of any required backup
withholding.
6. FSS shall not be liable for any error of judgment or mistake of law
or for any loss suffered by any Fund in connection with the matters to which
this Agreement relates, except a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement.
FSS shall be entitled to rely on and may act upon advice of counsel (who may
be counsel for such Fund) on all matters, and shall be without liability for
any action reasonably taken or omitted pursuant to such advice. Any person,
even though also an officer, trustee, partner, employee or agent of FSS, who
may be or become a member of such Fund's Board, officer, employee or agent of
any Fund, shall be deemed, when rendering services to such Fund or acting on
any business of such Fund (other than services or business in connection with
the duties of FSS hereunder) to be rendering such services to or acting solely
for such Fund and not as an officer, trustee, partner, employee or agent or
one under the control or direction of FSS even though paid by FSS.
This Section 6 shall survive termination of this Agreement.
7. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination
is sought.
8. FSS is expressly put on notice of the limitation of liability as set
forth in the Declaration of Trust of each Fund that is a Massachusetts
business trust and agrees that the obligations assumed by each such Fund
pursuant to this Agreement shall be limited in any case to such Fund and its
assets and that FSS shall not seek satisfaction of any such obligations from
the shareholders of such Fund, the Trustees, Officers, Employees or Agents of
such Fund, or any of them.
9. The execution and delivery of this Agreement have been authorized by
the Trustees of FSS and signed by an authorized officer of FSS, acting as
such, and neither such authorization by such Trustees nor such execution and
delivery by such officer shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, and the
obligations of this Agreement are not binding upon any of the Trustees or
shareholders of FSS, but bind only the trust property of FSS as provided in
the Declaration of Trust of FSS.
10. Notices of any kind to be given hereunder shall be in writing
(including facsimile communication) and shall be duly given if delivered to
any Fund and to such Fund at the following address: Federated Investors
Tower, Pittsburgh, PA 15222-3779, Attention: President and if delivered to
FSS at Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention:
President.
11. This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
hereof whether oral or written. If any provision of this Agreement shall be
held or made invalid by a court or regulatory agency decision, statute, rule
or otherwise, the remainder of this Agreement shall not be affected thereby.
Subject to the provisions of Sections 3 and 4, hereof, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and shall be governed by Pennsylvania law; provided,
however, that nothing herein shall be construed in a manner inconsistent with
the Investment Company Act of 1940 or any rule or regulation promulgated by
the Securities and Exchange Commission thereunder.
12. This Agreement may be executed by different parties on separate
counterparts, each of which, when so executed and delivered, shall be an
original, and all such counterparts shall together constitute one and the same
instrument.
13. This Agreement shall not be assigned by any party without the
prior written consent of FSS in the case of assignment by any Fund, or of the
Funds in the case of assignment by FSS, except that any party may assign to a
successor all of or a substantial portion of its business to a party
controlling, controlled by, or under common control with such party. Nothing
in this Section 14 shall prevent FSS from delegating its responsibilities to
another entity to the extent provided herein.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.

Investment Companies (listedon Exhibit 1)

By: /s/ John F. Donahue
John F. Donahue
Chairman

Attest: /s/ John W. McGonigle
John W. McGonigle

Federated Shareholder Services

By: /s/ James J. Dolan

Title: President

Attest: /s/ John W. McGonigle
John W. McGonigle

Exhibit 1
Shareholder Services Agreement

Tax-Free Instruments Trust
Investment Shares
Institutional Service Shares

Exhibit 16 under Form N-1A
Exhibit 99 under Item 601/Reg. S-K

SCHEDULE FOR COMPUTATION OF YIELD QUOTATION

This example of illustrates the yield quotation for the seven-day
period ended June 30, 1988:

Value of a hypothetical pre-existing account with exactly
one share at the beginning of the base period $1.000000000

Value of same account (excluding capital changes)
at end of the seven-day base period* 1.000881847

Net change in account value $0.000881847

Base Period Yield:
Net change in account value divided by the beginning
account value ($0.000881847 / $1.000000000) 0.000881847

Annualized Current Net Yield [0.000881847 x (365/7-1)] 4.60%

Compound Effective Yield ** (0.000881847 +1) 365/7-1 4.70%

*This value includes the value of additional shares purchased with dividends
from the original share, and
dividends declared on both the original share and any such additional shares.

**This value may change to include shares purchased with dividends reinvested
on a less frequent basis.

Exhibit 9(v) under Form N-1A
Exhibit 10 under Item 601/Reg. S-K

SHAREHOLDER SERVICES SUB-CONTRACT

This Agreement is made between the Financial Institution executing
this Agreement ("Provider") and Federated Shareholder Services ("FSS")
on behalf of the investment companies listed in Exhibit A hereto (the
"Funds"), for whom FSS administers the Shareholder Services Plan
("Plan") and who have approved this form of Agreement. In consideration
of the mutual covenants hereinafter contained, it is hereby agreed by
and between the parties hereto as follows:

1. FSS hereby appoints Provider to render or cause to be
rendered personal services to shareholders of the Funds and/or the
maintenance of accounts of shareholders of the Funds ("Services").
Provider agrees to provide Services which, in its best judgment, are
necessary or desirable for its customers who are investors in the Funds.
Provider further agrees to provide FSS, upon request, a written
description of the Services which Provider is providing hereunder.

2. During the term of this Agreement, the Funds will pay the
Provider fees as set forth in a written schedule delivered to the
Provider pursuant to this Agreement. The fee schedule for Provider may
be changed by FSS sending a new fee schedule to Provider pursuant to
Paragraph 9 of this Agreement. For the payment period in which this
Agreement becomes effective or terminates, there shall be an appropriate
proration of the fee on the basis of the number of days that this
Agreement is in effect during the quarter. To enable the Funds to
comply with an applicable exemptive order, Provider represents that the
fees received pursuant to this Agreement will be disclosed to its
customers, will be authorized by its customers, and will not result in
an excessive fee to the Provider.

3. The Provider understands that the Department of Labor views
ERISA as prohibiting fiduciaries of discretionary ERISA assets from
receiving shareholder service fees or other compensation from funds in
which the fiduciary's discretionary ERISA assets are invested. To date,
the Department of Labor has not issued any exemptive order or advisory
opinion that would exempt fiduciaries from this interpretation. Without
specific authorization from the Department of Labor, fiduciaries should
carefully avoid investing discretionary assets in any fund pursuant to
an arrangement where the fiduciary is to be compensated by the fund for
such investment. Receipt of such compensation could violate ERISA
provisions against fiduciary self-dealing and conflict of interest and
could subject the fiduciary to substantial penalties.

4. The Provider agrees not to solicit or cause to be solicited
directly, or indirectly at any time in the future, any proxies from the
shareholders of a Fund in opposition to proxies solicited by management
of the Fund, unless a court of competent jurisdiction shall have
determined that the conduct of a majority of the Board of Trustees or
Directors of the Fund constitutes willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties. This paragraph 4 will
survive the term of this Agreement.

5. This Agreement shall continue in effect for one year from
the date of its execution, and thereafter for successive periods of one
year if the form of this Agreement is approved at least annually by the
Board of each Fund, including a majority of the members of the Board of
the Fund who are not interested persons of the Fund and have no direct
or indirect financial interest in the operation of the Fund's Plan or in
any related documents to the Plan ("Disinterested Board Members") cast
in person at a meeting called for that purpose.

6. Notwithstanding paragraph 5, this Agreement may be
terminated as follows:

(a) at any time, without the payment of any penalty, by
the vote of a majority of the Disinterested Board Members of the
Fund or by a vote of a majority of the outstanding voting
securities of the Fund as defined in the Investment Company Act
of 1940 on not more than sixty (60) days' written notice to the
parties to this Agreement;

(b) automatically in the event of the Agreement's
assignment as defined in the Investment Company Act of 1940; and

(c) by either party to the Agreement without cause by
giving the other party at least sixty (60) days' written notice
of its intention to terminate.

7. The Provider agrees to obtain any taxpayer identification
number certification from its customers required under Section 3406 of
the Internal Revenue Code, and any applicable Treasury regulations, and
to provide the Fund or its designee with timely written notice of any
failure to obtain such taxpayer identification number certification in
order to enable the implementation of any required backup withholding.

8. The execution and delivery of this Agreement have been
authorized by the Trustees of FSS and signed by an authorized officer of
FSS, acting as such, and neither such authorization by such Trustees nor
such execution and delivery by such officer shall be deemed to have been
made by any of them individually or to impose any liability on any of
them personally, and the obligations of this Agreement are not binding
upon any of the Trustees or shareholders of FSS, but bind only the trust
property of FSS as provided in the Declaration of Trust of FSS.

9. Notices of any kind to be given hereunder shall be in
writing (including facsimile communication) and shall be duly given if
delivered to Provider at the address set forth below and if delivered to
FSS at Federated Investors Tower, Pittsburgh, PA 15222-3779, Attention:
President.

10. This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the
subject hereof whether oral or written. If any provision of this
Agreement shall be held or made invalid by a court or regulatory agency
decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. Subject to the provisions of Sections 5
and 6, hereof, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and
shall be governed by Pennsylvania law; provided, however, that nothing
herein shall be construed in a manner inconsistent with the Investment
Company Act of 1940 or any rule or regulation promulgated by the
Securities and Exchange Commission thereunder.

11. This Agreement may be executed by different parties on
separate counterparts, each of which, when so executed and delivered,
shall be an original, and all such counterparts shall together
constitute one and the same instrument.

12. This Agreement shall not be assigned by any party without
the prior written consent of FSS in the case of assignment by Provider,
or of Provider in the case of assignment by FSS, except that any party
may assign to a successor all of or a substantial portion of its
business to a party controlling, controlled by, or under common control
with such party.

13. This Agreement may be amended by FSS from time to time by
the following procedure. FSS will mail a copy of the amendment to the
Provider's address, as shown below. If the Provider does not object to
the amendment within thirty (30) days after its receipt, the amendment
will become part of the Agreement. The Provider's objection must be in
writing and be received by FSS within such thirty days.

14. This Agreement may be terminated with regard to a
particular Fund or Class at any time, without the payment of any
penalty, by FSS or by the vote of a majority of the Disinterested
Trustees or Directors, as applicable, or by a majority of the
outstanding voting securities of the particular Fund or Class on not
more than sixty (60) days' written notice to the Provider. This
Agreement may be terminated by Provider on sixty (60) days' written
notice to FSS.

15. The Provider acknowledges and agrees that FSS has entered
into this Agreement solely in the capacity of agent for the Funds and
administrator of the Plan. The Provider agrees not to claim that FSS is
liable for any responsibilities or amounts due by the Funds hereunder.

[Provider]

Address

City State Zip Code

Dated: By:
Authoried Signature

Title

Print Name of Authorized Signature

FEDERATED SHAREHOLDER SERVICES
Federated Investors Tower
Pittsburgh, Pennsylvania 15222-3779

By:
Vice President

EXHIBIT A to Shareholder Services Sub-Contract with
Tax-Free Instruments Trust

Funds covered by this Agreement:

Tax-Free Instruments Trust
Investment Shares
Institutional Service Shares

Shareholder Service Fees

1. During the term of this Agreement, FSS will pay Provider a
quarterly fee. This fee will be computed at the annual rate of 0.25 of
1% of the average net asset value of shares of the Funds held during the
quarter in accounts for which the Provider provides Services under this
Agreement, so long as the average net asset value of Shares in the Funds
during the quarter equals or exceeds such minimum amount as FSS shall
from time to time determine and communicate in writing to the Provider.

2. For the quarterly period in which the Agreement becomes
effective or terminates, there shall be an appropriate proration of any
fee payable on the basis of the number of days that the Agreement is in
effect during the quarter.

Exhibit 1 under Form N-1A
Exhibit 3(a) under Item 601/Reg. S-K

TAX-FREE INSTRUMENTS TRUST

Amended and Restated
Declaration of Trust

TABLE OF CONTENTS

Page

ARTICLE I. NAMES AND DEFINITIONS ............................. 1

Section 1. Name .......................................... 1
Section 2. Definitions ................................... 1

ARTICLE II. PURPOSE OF TRUST .................................. 2

ARTICLE III. BENEFICIAL INTEREST................................ 2

Section 1. Shares of Beneficial Interest ................. 2
Section 2. Ownership of Shares ........................... 2
Section 3. Investment in the Trust ....................... 3
Section 4. No Pre-emptive Rights ......................... 3
Section 5. Establishment and Designation of Series
or Class ................................... 3

ARTICLE IV. THE TRUSTEES ...................................... 5

Section 1. Management of the Trust ....................... 5
Section 2. Election of Trustees at Meeting of
Shareholders ............................... 5
Section 3. Term of Office of Trustees .................... 5
Section 4. Termination of Service and Appointment
of Trustees ................................ 5
Section 5. Number of Trustees ............................ 6
Section 6. Effect of Death, Resignation, etc. of a
Trustee .................................... 6
Section 7. Ownership of Assets ........................... 6

ARTICLE V. POWERS OF THE TRUSTEES ............................ 6

Section 1. Powers ........................................ 6
Section 2. Principal Transactions ........................ 9
Section 3. Trustees and Officers as Shareholders.......... 9
Section 4. Parties to Contract ........................... 9

-i-
Page

ARTICLE VI. TRUSTEES' EXPENSES AND COMPENSATION ............... 10

Section 1. Trustee Reimbursement ........................ 10
Section 2. Trustee Compensation ......................... 10

ARTICLE VII. INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER AND
TRANSFER AGENT ......................... 11

Section 1. Investment Adviser ........................... 11
Section 2. Administrative Services ...................... 11
Section 3. Principal Underwriter ........................ 11
Section 4. Transfer Agent ............................... 12

ARTICLE VIII. SHAREHOLDERS' VOTING POWERS AND MEETINGS .......... 12

Section 1. Voting Powers ................................ 12
Section 2. Meetings ..................................... 12
Section 3. Quorum and Required Vote ..................... 12
Section 4. Additional Provisions ........................ 13

ARTICLE IX. CUSTODIAN ......................................... 13

ARTICLE X. DISTRIBUTIONS AND REDEMPTIONS ..................... 13

Section 1. Distributions ................................ 13
Section 2. Redemptions and Repurchases .................. 14
Section 3. Net Asset Value of Shares .................... 14
Section 4. Suspension of the Right of Redemption......... 15
Section 5. Trust's Right to Redeem Shares ............... 15

ARTICLE XI. LIMITATION OF LIABILITY AND INDEMNIFICATION ....... 15

Section 1. Limitation of Personal Liability and
Indemnification of Shareholders ............ 15
Section 2. Limitation of Personal Liability of
Trustees, Officers, Employees or
Agents of the Trust ........................ 16
Section 3. Express Exculpatory Clauses and
Instruments ................................ 16

-ii-
Page

ARTICLE XII. MISCELLANEOUS...................................... 17

Section 1. Trust is not a Partnership ................... 17
Section 2. Trustee Action Binding, Expert Advice,
No Bond or Surety .......................... 17
Section 3. Establishment of Record Dates ................ 17
Section 4. Termination of Trust ......................... 18
Section 5. Offices of the Trust, Filing of Copies,
Headings, Counterparts ..................... 18
Section 6. Applicable Law ............................... 18
Section 7. Amendments -- General ........................ 19
Section 8. Amendments -- Series and Classes.............. 19
Section 9. Use of Name .................................. 20

-iii-
AMENDED AND RESTATED OF
DECLARATION OF TRUST

TAX-FREE INSTRUMENTS TRUST

Dated August 30, 1993

THIS AMENDED AND RESTATED DECLARATION OF TRUST made August 30, 1993, by
John F. Donahue, John T. Conroy, Jr., William J. Copeland, James E. Dowd,
Lawrence D. Ellis, M.D., Edward L. Flaherty, Jr., Peter E. Madden, Gregor F.
Meyer, Wesley W. Posvar, and Marjorie P. Smuts.

WHEREAS, the Trustees desire to establish a trust fund for the investment
and reinvestment of funds contributed thereto;

NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed under this
Declaration of Trust IN TRUST as herein set forth below.

ARTICLE I

NAMES AND DEFINITIONS

Section 1. Name.

This Trust shall be known as the TAX-FREE INSTRUMENTS TRUST

Section 2. Definitions.

Wherever used herein, unless otherwise required by the context or
specifically provided:

(a) The terms "Affiliated Person," "Assignment," "Commission,"
"Interested Person," "Majority Shareholder Vote" (the 67% or 50%
requirement of Section 2(a)(42) of the 1940 Act, whichever may be
applicable) and "Principal Underwriter" shall have the meanings given
them in the 1940 Act, as amended from time to time;

(b) The "Trust" refers to the TAX-FREE INSTRUMENTS TRUST.

(c) "Class" refers to a class of Shares established and designated
under or in accordance with the provisions of Article III;

(d) "Series" refers to a series of Shares established and
designated under or in accordance with the provisions of Article III;

(e) "Series Company" refers to the form of a registered open-end
investment company described in Section 18(f)(2) of the 1940 Act or in
any successor statutory provision;

(f) "Shareholder" means a record owner of Shares of any Series or
Class;
(g) The "Trustees" refer to the individual Trustees in their
capacity as Trustees hereunder of the Trust and their successor or
successors for the time being in office as such Trustees;

(h) "Shares" means the equal proportionate units of interest into
which the beneficial interest in the Trust shall be divided from time to
time, or if more than one Series or Class of Shares is authorized by
the Trustees, the equal proportionate units into which each Series or
Class of Shares shall be divided from time to time and includes
fractions of Shares as well as whole Shares; and

(i) The "1940 Act" refers to the Investment Company Act of 1940,
and the Rules and Regulations thereunder, (including any exemptions
granted thereunder) as amended from time to time.

ARTICLE II
PURPOSE OF TRUST

The purpose of this Trust is to provide investors a continuous source of
managed investments by investing primarily in securities (including options)
and also in debt instruments, commodities, commodity contracts and options
thereon.

ARTICLE III
BENEFICIAL INTEREST

Section 1. Shares of Beneficial Interest.

The beneficial interest in the Trust shall at all times be divided
into transferable Shares, without par value. Subject to the provisions
of Section 5 of this Article III, each Share shall have voting rights as
provided in Article VIII hereof, and holders of the Shares of any Series
shall be entitled to receive dividends, when and as declared with
respect thereto in the manner provided in Article X, Section 1 hereof.
The Shares of any Series may be issued in two or more Classes, as the
Trustees may authorize pursuant to Article XII, Section 8 hereof.
Unless the Trustees have authorized the issuance of Shares of a Series
in two or more Classes, each Share of a Series shall represent an equal
proportionate interest in the assets and liabilities of the Series with
each other Share of the same Series, none having priority or preference
over another. If the Trustees have authorized the issuance of Shares of
a Series in two or more Classes, then the Classes may have such
variations as to dividend, redemption, and voting rights, net asset
values, expenses borne by the Classes, and other matters as the Trustees
have authorized provided that each Share of a Class shall represent an
equal proportionate interest in the assets and liabilities of the Class
with each other Share of the same Class, none having priority or
preference over another. The number of Shares authorized shall be
unlimited. The Trustees may from time to time divide or combine the
Shares of any Series or Class into a greater or lesser number without
thereby changing the proportionate beneficial interests in the Series or
Class.

Section 2. Ownership of Shares.

The ownership of Shares shall be recorded in the books of the Trust
or a transfer agent which books shall be maintained separately for the
Shares of each Series or Class. The Trustees may make such rules as
they consider appropriate for the transfer of Shares and similar
matters. The record books of the Trust or any transfer agent, as
the case may be, shall be conclusive as to who are the Shareholders of
each Series or Class and as to the number of Shares of each Series or
Class held from time to time by each.

Section 3. Investment in the Trust.

The Trustees shall accept investments in the Trust from such persons
and on such terms as they may from time to time authorize. After the
date of the initial contribution of capital (which shall occur prior to
the initial public offering of Shares), the number of Shares to
represent the initial contribution shall be considered as outstanding
and the amount received by the Trustees on account of the contribution
shall be treated as an asset of the Trust to be allocated among any
Series or Classes in the manner described in Section 5(a) of this
Article. Subsequent to such initial contribution of capital, Shares
(including Shares which may have been redeemed or repurchased by the
Trust) may be issued or sold at a price which will net the relevant
Series or Class, as the case may be, before paying any taxes in
connection with such issue or sale, not less than the net asset value
(as defined in Article X, Section 3) thereof; provided, however, that
the Trustees may in their discretion impose a sales charge upon
investments in the Trust.

Section 4. No Pre-emptive Rights.

Shareholders shall have no pre-emptive or other right to subscribe
to any additional Shares or other securities issued by the Trust.

Section 5. Establishment and Designation of Series or Class.

Without limiting the authority of the Trustees set forth in Article
XII, Section 8, inter alia, to establish and designate any additional
series or class or to modify the rights and preferences of any existing
Series or Class, the initial series shall be, and are established and
designated as, Tax-Free Instruments Trust - Investment Shares and Tax-
Free Instruments Trust - Institutional Service Shares.

Shares of any Series or Class established in this Section 5 shall
have the following relative rights and preferences:

(a) Assets belonging to Series or Class. All consideration
received by the Trust for the issue or sale of Shares of a
particular Series or Class, together with all assets in which such
consideration is invested or reinvested, all income, earnings,
profits, and proceeds thereof from whatever source derived,
including, without limitation, any proceeds derived from the sale,
exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the
same may be, shall irrevocably belong to that Series or Class for
all purposes, subject only to the rights of creditors, and shall be
so recorded upon the books of account of the Trust. Such
consideration, assets, income, earnings, profits and proceeds
thereof, from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from
any reinvestment of such proceeds, in whatever form the same may be,
are herein referred to as "assets belonging to" that Series or
Class. In the event that there are any assets, income, earnings,
profits and proceeds thereof, funds or payments which are not
readily identifiable as belonging to any particular Series or Class
(collectively "General Assets"), the Trustees shall allocate such
General Assets to, between or among any one or more of the Series or
Classes established and designated from time to time in such manner
and on such basis as they, in their sole discretion, deem fair and
equitable, and any General Assets so allocated to a particular
Series or Class shall belong to that Series or Class. Each such
allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series or Classes for all purposes.

(b) Liabilities Belonging to Series or Class. The assets
belonging to each particular Series or Class shall be charged with
the liabilities of the Trust in respect to that Series or Class and
all expenses, costs, charges and reserves attributable to that
Series or Class, and any general liabilities of the Trust which are
not readily identifiable as belonging to any particular Series or
Class shall be allocated and charged by the Trustees to and among
any one or more of the Series or Classes established and designated
from time to time in such manner and on such basis as the Trustees
in their sole discretion deem fair and equitable. The liabilities,
expenses, costs, charges and reserves so charged to a Series or
Class are herein referred to as "liabilities belonging to" that
Series or Class. Each allocation of liabilities belonging to a
Series or class by the Trustees shall be conclusive and binding upon
the Shareholders of all Series or Classes for all purposes.

(c) Dividends, Distributions, Redemptions, Repurchases and
Indemnification. Notwithstanding any other provisions of this
Declaration, including, without limitation, Article X, no dividend
or distribution (including, without limitation, any distribution
paid upon termination of the Trust or of any Series or Class) with
respect to, nor any redemption or repurchase of the Shares of any
Series or Class shall be effected by the Trust other than from the
assets belonging to such Series or Class, nor except as specifically
provided in Section 1 of Article XI hereof, shall any Shareholder of
any particular Series or Class otherwise have any right or claim
against the assets belonging to any other Series or Class except to
the extent that such Shareholder has such a right or claim hereunder
as a Shareholder of such other Series or Class.

(d) Voting. Notwithstanding any of the other provisions of
this Declaration, including, without limitation, Section 1 of
Article VIII, only Shareholders of a particular Series or Class
shall be entitled to vote on any matters affecting such Series or
Class. Except with respect to matters as to which any particular
Series or Class is affected, all of the Shares of each Series or
Class shall, on matters as to which such Series or Class is entitled
to vote, vote with other Series or Classes so entitled as a single
class. Notwithstanding the foregoing, with respect to matters which
would otherwise be voted on by two or more Series or Classes as a
single class, the Trustees may, in their sole discretion, submit
such matters to the Shareholders of any or all such Series or
Classes, separately.

(e) Fraction. Any fractional Share of a Series or Class shall
carry proportionately all the rights and obligations of a whole
Share of that Series or Class, including rights with respect to
voting, receipt of dividends and distributions, redemption of Shares
and termination of the Trust or of any Series or Class.

(f) Exchange Privilege. The Trustees shall have the authority
to provide that the holders of Shares of any Series or Class shall
have the right to exchange said Shares for Shares of one or more
other Series or Classes in accordance with such requirements and
procedures as may be established by the Trustees.

(g) Combination of Series or Classes. The Trustees shall have
the authority, without the approval of the Shareholders of any
Series or Class, unless otherwise required by applicable law, to
combine the assets and liabilities belonging to a single Series or
Class with the assets and liabilities of one or more other Series or
Classes.

(h) Elimination of Series or Classes. At any time that there
are no Shares outstanding of any particular Series or Class
previously established and designated, the Trustees may amend this
Declaration of Trust to abolish that Series or Class and to rescind
the establishment and designation thereof.

ARTICLE IV
THE TRUSTEES

Section 1. Management of the Trust.

The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to
carry out that responsibility. The Trustees who shall serve until the
election of Trustees at the Meeting of Shareholders subsequent to the
initial public offering of Shares shall be John F. Donahue, William J.
Copeland, James E. Dowd, Lawrence D. Ellis, M.D., Edward L. Flaherty,
Jr., Marjorie P. Smuts, Gregor F. Meyer, Wesley W. Posvar, Peter E.
Madden, and John T. Conroy, Jr.

Section 2. Election of Trustees at Meeting of Shareholders.

On a date fixed by the Trustees, which shall be subsequent to the
initial public offering of Shares, the Shareholders shall elect
Trustees. The number of Trustees shall be determined by the Trustees
pursuant to Article IV, Section 5.

Section 3. Term of Office of Trustees.

The Trustees shall hold office during the lifetime of this Trust,
and until its termination as hereinafter provided; except (a) that any
Trustee may resign his office at any time by written instrument signed
by him and delivered to the other Trustees, which shall take effect upon
such delivery or upon such later date as is specified therein; (b) that
any Trustee may be removed at any time by written instrument signed by
at least two-thirds of the number of Trustees prior to such removal,
specifying the date when such removal shall become effective; (c) that
any Trustee who requests in writing to be retired or who has become
mentally or physically incapacitated may be retired by written
instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) a Trustee may be removed at any special
meeting of Shareholders of the Trust by a vote of two-thirds of the
outstanding Shares.

Section 4. Termination of Service and Appointment of Trustees.

In case of the death, resignation, retirement, removal or mental or
physical incapacity of any of the Trustees, or in case a vacancy shall,
by reason of an increase in number, or for any other reason, exist, the
remaining Trustees shall fill such vacancy by appointing such other
person as they in their discretion shall see fit. Such appointment
shall be effected by the signing of a written instrument by a majority
of the Trustees in office. An appointment of a Trustee may be made by
the Trustees then in office in anticipation of a vacancy to occur by
reason of retirement, resignation or increase in number of Trustees
effective at a later date, provided that said appointment shall become
effective only at or after the effective date of said retirement,
resignation or increase in number of Trustees. As soon as any Trustee
so appointed shall have accepted this Trust, the trust estate shall vest
in the new Trustee or Trustees, together with the continuing Trustees,
without any further act or conveyance, and he shall be deemed a Trustee
hereunder. Any appointment authorized by this Section 4 is subject to
the provisions of Section 16(a) of the 1940 Act.

Section 5. Number of Trustees.

The number of Trustees, not less than three (3) nor more than twenty
(20) serving hereunder at any time, shall be determined by the Trustees
themselves.

Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled or while any Trustee is physically or mentally
incapacitated, the other Trustees shall have all the powers hereunder
and the certificate signed by a majority of the other Trustees of such
vacancy, absence or incapacity, shall be conclusive, provided, however,
that no vacancy which reduces the number of Trustees below three (3)
shall remain unfilled for a period longer than six calendar months.

Section 6. Effect of Death, Resignation, etc. of a Trustee.

The death, resignation, retirement, removal, or mental or physical
incapacity of the Trustees, or any one of them, shall not operate to
annul the Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust.

Section 7. Ownership of Assets.

The assets belonging to each Series or Class shall be held separate
and apart from any assets now or hereafter held in any capacity other
than as Trustee hereunder by the Trustees or any successor Trustee. All
of the assets belonging to each Series or Class or owned by the Trust
shall at all times be considered as vested in the Trustees. No
Shareholder shall be deemed to have a severable ownership interest in
any individual asset belonging to any Series or Class or owned by the
Trust or any right of partition or possession thereof, but each
Shareholder shall have a proportionate undivided beneficial interest in
a Series or Class.

ARTICLE V
POWERS OF THE TRUSTEES

Section 1. Powers.

The Trustees in all instances shall act as principals, and are and
shall be free from the control of the Shareholders. The Trustees shall
have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider
necessary or appropriate in connection with the management of the Trust
or a Series or Class. The Trustees shall not be bound or limited by
present or future laws or customs in regard to trust investments, but
shall have full authority and power to make any and all investments
which they, in their uncontrolled discretion, shall deem proper to
accomplish the purpose of this Trust. Without limiting the foregoing,
the Trustees shall have the following specific powers and authority,
subject to any applicable limitation in this Declaration of Trust or in
the By-Laws of the Trust:

(a) To buy, and invest funds in their hands in securities
including, but not limited to, common stocks, preferred stocks,
bonds, debentures, warrants and rights to purchase securities,
options, certificates of beneficial interest, money market
instruments, notes or other evidences of indebtedness issued by any
corporation, trust or association, domestic or foreign, or issued or
guaranteed by the United States of America or any agency or
instrumentality thereof, by the government of any foreign country,
by any State of the United States, or by any political subdivision
or agency or instrumentality of any State or foreign country, or in
"when-issued" or "delayed-delivery" contracts for any such
securities, or in any repurchase agreement or reverse repurchase
agreement, or in debt instruments, commodities, commodity contracts
and options thereon, or to retain assets belonging to each and every
Series or Class in cash, and from time to time to change the
investments of the assets belonging to each Series or Class;

(b) To adopt By-Laws of the Trust not inconsistent with the
Declaration of Trust providing for the conduct of the business of
the Trust and to amend and repeal them to the extent that they do
not reserve that right to the Shareholders;

(c) To Elect and remove such officers of the Trust and appoint
and terminate such agents of the Trust as they consider appropriate;

(d) To appoint or otherwise engage a bank or trust company as
custodian of any assets belonging to any Series or Class subject to
any conditions set forth in this Declaration of Trust or in the By-
Laws;

(e) To appoint or otherwise engage transfer agents, dividend
disbursing agents, Shareholder servicing agents, investment
advisers, sub-investment advisers, principal underwriters,
administrative service agents, and such other agents as the Trustees
may from time to time appoint or otherwise engage;

(f) To provide for the distribution of any Shares of any
Series or Class either through a principal underwriter in the manner
hereinafter provided for or by the Trust itself, or both;

(g) To set record dates in the manner hereinafter provided
for;

(h) To delegate such authority as they consider desirable to a
committee or committees composed of Trustees, including without
limitation, an Executive Committee, or to any officers of the Trust
and to any agent, custodian or underwriter;

(i) To sell or exchange any or all of the assets belonging to
one or more Series or Classes, subject to the provisions of Article
XII, Section 4(b) hereof;

(j) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property;
and to execute and deliver powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such person
or persons such power and discretion with relation to securities or
property as the Trustees shall deem proper;

(k) To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities;

(l) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form;
or either in its own name or in the name of a custodian or a nominee
or nominees, subject in either case to proper safeguards according
to the usual practice of Massachusetts trust companies or investment
companies;

(m) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
concern, any security of which belongs to any Series or Class; to
consent to any contract, lease, mortgage, purchase, or sale of
property by such corporation or concern, and to pay calls or
subscriptions with respect to any security which belongs to any
Series or Class;

(n) To engage in and to prosecute, compound, compromise,
abandon, or adjust, by arbitration, or otherwise, any actions,
suits, proceedings, disputes, claims, demands, and things relating
to the Trust, and out of the assets belonging to any Series or Class
to pay, or to satisfy, any debts, claims or expenses incurred in
connection therewith, including those of litigation, upon any
evidence that the Trustees may deem sufficient (such powers shall
include without limitation any actions, suits, proceedings,
disputes, claims, demands and things relating to the Trust wherein
any of the Trustees may be named individually and the subject matter
of which arises by reason of business for or on behalf of the
Trust);

(o) To make distributions of income and of capital gains to
Shareholders;

(p) To borrow money;

(q) From time to time to issue and sell the Shares of any
Series or Class either for cash or for property whenever and in such
amounts as the Trustees may deem desirable, but subject to the
limitation set forth in Section 3 of Article III.

(r) To purchase insurance of any kind, including, without
limitation, insurance on behalf of any person who is or was a
Trustee, Officer, employee or agent of the Trust, or is or was
serving at the request of the Trust as a Trustee, Director, Officer,
agent or employee of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted
against him and incurred by him in any such capacity or arising out
of his status as such.

(s) To sell, exchange, lend, pledge, mortgage, hypothecate,
lease, or write options with respect to or otherwise deal in any
property rights relating to any or all of the assets belonging to
any Series or Class.

The Trustees shall have all of the powers set forth in this Section 1
with respect to all assets and liabilities of each Series and Class.

Section 2. Principal Transactions.

The Trustees shall not cause the Trust on behalf of any Series or
Class to buy any securities (other than Shares) from or sell any
securities (other than Shares) to, or lend any assets belonging to any
Series or Class to any Trustee or officer or employee of the Trust or
any firm of which any such Trustee or officer is a member acting as
principal unless permitted by the 1940 Act, but the Trust may employ any
such other party or any such person or firm or company in which any such
person is an interested person in any capacity not prohibited by the
1940 Act.

Section 3. Trustees and Officers as Shareholders.

Any Trustee, officer or other agent of the Trust or any Series or
Class may acquire, own and dispose of Shares of any Series or Class to
the same extent as if he were not a Trustee, officer or agent; and the
Trustees may issue and sell or cause to be issued or sold Shares of any
Series or Class to and buy such Shares from any such person or any firm
or company in which he is an interested person subject only to the
general limitations herein contained as to the sale and purchase of such
Shares; and all subject to any restrictions which may be contained in
the By-Laws.

Section 4. Parties to Contract.

The Trustees may enter into any contract of the character described
in Article VII or in Article IX hereof or any other capacity not
prohibited by the 1940 Act with any corporation, firm, trust or
association, although one or more of the shareholders, Trustees,
officers, employees or agents of the Trust or any Series or Class or
their affiliates may be an officer, director, trustee, shareholder or
interested person of such other party to the contract, and no such
contract shall be invalidated or rendered voidable by reason of the
existence of any such relationship, nor shall any person holding such
relationship be liable merely by reason of such relationship for any
loss or expense to the Trust or any Series or Class under or by reason
of said contract or accountable for any profit realized directly or
indirectly therefrom, in the absence of actual fraud. The same person
(including a firm, corporation, trust or association) may be the other
party to contracts entered into pursuant to Article VII or Article IX or
any other capacity not prohibited by the 1940 Act, and any individual
may be financially interested or otherwise an interested person of
persons who are parties to any or all of the contracts mentioned in this
Section 4.

ARTICLE VI
TRUSTEES' EXPENSES AND COMPENSATION

Section 1. Trustee Reimbursement.

The Trustees shall be reimbursed from the assets belonging to each
particular Series or Class for all of such Trustees' expenses as such
expenses are allocated to and among any one or more of the Series or
Classes pursuant to Article III, Section 5(b), including, without
limitation, expenses of organizing the Trust or any Series or Class and
continuing its or their existence; fees and expenses of Trustees and
Officers of the Trust; fees for investment advisory services,
administrative services and principal underwriting services provided for
in Article VII, Sections 1, 2 and 3; fees and expenses of preparing and
printing Registration Statements under the Securities Act of 1933 and
the 1940 Act and any amendments thereto; expenses of registering and
qualifying the Trust and any Series or Class and the Shares of any
Series or Class under federal and state laws and regulations; expenses
of preparing, printing and distributing prospectuses and any amendments
thereto sent to shareholders, underwriters, broker-dealers and to
investors who may be considering the purchase of Shares; expenses of
registering, licensing or other authorization of the Trust or any Series
or Class as a broker-dealer and of its or their officers as agents and
salesmen under federal and state laws and regulations; interest
expenses, taxes, fees and commissions of every kind; expenses of issue
(including cost of share certificates), purchases, repurchases and
redemptions of Shares, including expenses attributable to a program of
periodic issue; charges and expenses of custodians, transfer agents,
dividend disbursing agents, Shareholder servicing agents and registrars;
printing and mailing costs; auditing, accounting and legal expenses;
reports to Shareholders and governmental officers and commissions;
expenses of meetings of Shareholders and proxy solicitations therefor;
insurance expenses; association membership dues and nonrecurring items
as may arise, including all losses and liabilities by them incurred in
administering the Trust and any Series or Class, including expenses
incurred in connection with litigation, proceedings and claims and the
obligations of the Trust under Article XI hereof and the By-Laws to
indemnify its Trustees, Officers, employees, shareholders and agents,
and any contract obligation to indemnify principal underwriters under
Section 3 of Article VII; and for the payment of such expenses,
disbursements, losses and liabilities, the Trustees shall have a lien on
the assets belonging to each Series or Class prior to any rights or
interests of the Shareholders of any Series or Class. This section
shall not preclude the Trust from directly paying any of the
aforementioned fees and expenses.

Section 2. Trustee Compensation.

The Trustees shall be entitled to compensation from the Trust from
the assets belonging to any Series or Class for their respective
services as Trustees, to be determined from time to time by vote of the
Trustees, and the Trustees shall also determine the compensation of all
Officers, consultants and agents whom they may elect or appoint. The
Trust may pay out of the assets belonging to any Series or Class any
Trustee or any corporation, firm, trust or other entity of which a
Trustee is an interested person for services rendered in any capacity
not prohibited by the 1940 Act, and such payments shall not be deemed
compensation for services as a Trustee under the first sentence of this
Section 2 of Article VI.

ARTICLE VII
INVESTMENT ADVISER, ADMINISTRATIVE SERVICES,
PRINCIPAL UNDERWRITER AND TRANSFER AGENT

Section 1. Investment Adviser.

Subject to a Majority Shareholder Vote by the relevant Series or
Class, the Trustees may in their discretion from time to time enter into
an investment advisory contract whereby the other party to such contract
shall undertake to furnish the Trustees investment advisory services for
such Series or Class upon such terms and conditions and for such
compensation as the Trustees may in their discretion determine. Subject
to a Majority Shareholder Vote by the relevant Series or Class, the
investment adviser may enter into a sub-investment advisory contract to
receive investment advice and/or statistical and factual information
from the sub-investment adviser for such Series or Class upon such terms
and conditions and for such compensation as the Trustees, in their
discretion, may agree. Notwithstanding any provisions of this
Declaration of Trust, the Trustees may authorize the investment adviser
or sub-investment adviser or any person furnishing administrative
personnel and services as set forth in Article VII, Section 2 (subject
to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales or exchanges of portfolio
securities belonging to a Series or Class on behalf of the Trustees or
may authorize any officer or Trustee to effect such purchases, sales, or
exchanges pursuant to recommendations of the investment adviser (and all
without further action by the Trustees). Any such purchases, sales and
exchanges shall be deemed to have been authorized by the Trustees. The
Trustees may also authorize the investment adviser to determine what
firms shall be employed to effect transactions in securities for the
account of a Series or Class and to determine what firms shall
participate in any such transactions or shall share in commissions or
fees charged in connection with such transactions.

Section 2. Administrative Services.

The Trustees may in their discretion from time to time contract for
administrative personnel and services whereby the other party shall
agree to provide the Trustees administrative personnel and services to
operate the Trust or a Series or Class on a daily basis, on such terms
and conditions as the Trustees may in their discretion determine. Such
services may be provided by one or more entities.

Section 3. Principal Underwriter.

The Trustees may in their discretion from time to time enter into an
exclusive or nonexclusive contract or contracts providing for the sale
of the Shares of a Series or Class to net such Series or Class not less
than the amount provided in Article III, Section 3 hereof, whereby a
Series or Class may either agree to sell the Shares to the other party
to the contract or appoint such other party its sales agent for such
shares. In either case, the contract shall be on such terms and
conditions (including indemnification of principal underwriters
allowable under applicable law and regulation) as the Trustees may in
their discretion determine not inconsistent with the provisions of this
Article VII; and such contract may also provide for the
repurchase or sale of Shares of a Series or Class by such other party as
principal or as agent of the Trust and may provide that the other party
may maintain a market for shares of a Series or Class.

Section 4. Transfer Agent.

The Trustees may in their discretion from time to time enter into
transfer agency and shareholder services contracts whereby the other
party shall undertake to furnish a transfer agency and shareholder
services. The contracts shall be on such terms and conditions as the
Trustees may in their discretion determine not inconsistent with the
provisions of this Declaration of Trust or of the By-Laws. Such
services may be provided by one or more entities.

ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS

Section 1. Voting Powers.

Subject to the provisions set forth in Article III, Section 5(d),
the shareholders shall have power to vote, (i) for the election of
Trustees as provided in Article IV, Section 2; (ii) for the removal of
Trustees as provided in Article IV, Section 3(d); (iii) with respect to
any investment adviser or sub-investment adviser as provided in Article
VII, Section 1; (iv) with respect to the amendment of this Declaration
of Trust as provided in Article XII, Section 7; (v) to the same extent
as the shareholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should be brought or
maintained derivatively or as a class action on behalf of the Trust or
the Shareholders; and (vi) with respect to such additional matters
relating to the Trust as may be required by law, by this Declaration of
Trust, or the By-Laws of the Trust or any regulation of the Trust or the
Commission or any State, or as the Trustees may consider desirable.
Each whole Share shall be entitled to one vote as to any matter on which
it is entitled to vote, and each fractional Share shall be entitled to a
proportionate fractional vote. There shall be no cumulative voting in
the election of Trustees. Shares may be voted in person or by proxy.
Until Shares of a Series or Class are issued, the Trustees may exercise
all rights of Shareholders of such Series or Class with respect to
matters affecting such Series or Class, and may take any action with
respect to the Trust or such Series or Class required or permitted by
law, this Declaration of Trust or any By-Laws of the Trust to be taken
by Shareholders.

Section 2. Meetings.

A Shareholders meeting shall be held as specified in Section 2 of
Article IV at the principal office of the Trust or such other place as
the Trustees may designate. Special meetings of the Shareholders may be
called by the Trustees or the Chief Executive Officer of the Trust and
shall be called by the Trustees upon the written request of Shareholders
owning at least one-tenth of the outstanding Shares of all Series and
Classes entitled to vote. Shareholders shall be entitled to at least
fifteen days' notice of any meeting.

Section 3. Quorum and Required Vote.

Except as otherwise provided by law, to constitute a quorum for the
transaction of any business at any meeting of Shareholders there must be
present, in person or by proxy, holders of more than fifty percent of
the total number of outstanding Shares of all Series and Classes
entitled to vote at such meeting. When any one or more Series or
Classes is entitled to vote as a single Series or Class, more than fifty
percent of the shares of each such Series or Class entitled to vote
shall constitute a quorum at a Shareholder's meeting of that Series or
Class. If a quorum shall not be present for the purpose of any vote
that may properly come before the meeting, the Shares present in person
or by proxy and entitled to vote at such meeting on such matter may, by
plurality vote, adjourn the meeting from time to time to such place and
time without further notice than by announcement to be given at the
meeting until a quorum entitled to vote on such matter shall be present,
whereupon any such matter may be voted upon at the meeting as though
held when originally convened. Subject to any applicable requirement of
law or of this Declaration of Trust or the By-Laws, a plurality of the
votes cast shall elect a Trustee, and all other matters shall be decided
by a majority of the votes cast and entitled to vote thereon.

Section 4. Additional Provisions.

The By-Laws may include further provisions for Shareholders' votes
and meetings and related matters.

ARTICLE IX
CUSTODIAN

The Trustees may, in their discretion, from time to time enter into
contracts providing for custodial and accounting services to the Trust or any
Series or Class. The contracts shall be on the terms and conditions as the
Trustees may in their discretion determine not inconsistent with the
provisions of this Declaration of Trust or of the By-Laws. Such services may
be provided by one or more entities, including one or more sub-custodians.

ARTICLE X
DISTRIBUTIONS AND REDEMPTIONS

Section 1. Distributions.

(a) The Trustees may from time to time declare and pay
dividends to the Shareholders of any Series or Class, and the amount
of such dividends and the payment of them shall be wholly in the
discretion of the Trustees. Such dividends may be accrued and
automatically reinvested in additional Shares (or fractions thereof)
of the relevant Series or Class or paid in cash or additional Shares
of such Series or Class, all upon such terms and conditions as the
Trustees may prescribe.

(b) The Trustees may distribute in respect of any fiscal year
as dividends and as capital gains distributions, respectively,
amounts sufficient to enable any Series or Class to qualify as a
regulated investment company to avoid any liability for federal
income taxes in respect of that year.

(c) The decision of the Trustees as to what constitutes income
and what constitutes principal shall be final, and except as
specifically provided herein the decision of the Trustees as to what
expenses and charges of any Series or Class shall be charged against
principal and what against the income shall be final. Any income
not distributed in any year may be permitted to accumulate and as
long as not distributed may be invested from time to time in the
same manner as the principal funds of any Series or Class.

(d) All dividends and distributions on Shares of a particular
Series or Class shall be distributed pro rata to the holders of that
Series or Class in proportion to the number of Shares of that Series
or Class held by such holders and recorded on the books of the Trust
or its transfer agent at the date and time of record established for
that payment.

Section 2. Redemptions and Repurchases.

(a) In case any Shareholder of record of any Series or Class
at any time desires to dispose of Shares of such Series or Class
recorded in his name, he may deposit a written request (or such
other form of request as the Trustees may from time to time
authorize) requesting that the Trust purchase his Shares, together
with such other instruments or authorizations to effect the transfer
as the Trustees may from time to time require, at the office of the
Transfer Agent, and the Trust shall purchase his Shares out of
assets belonging to such Series or Class. The purchase price shall
be the net asset value of his shares reduced by any redemption
charge as the Trustees from time to time may determine.

Payment for such Shares shall be made by the Trust to the
Shareholder of record within that time period required under the
1940 Act after the request (and, if required, such other instruments
or authorizations of transfer) is deposited, subject to the right of
the Trustees to postpone the date of payment pursuant to Section 4
of this Article X. If the redemption is postponed beyond the date
on which it would normally occur by reason of a declaration by the
Trustees suspending the right of redemption pursuant to Section 4 of
this Article X, the right of the Shareholder to have his Shares
purchased by the Trust shall be similarly suspended, and he may
withdraw his request (or such other instruments or authorizations of
transfer) from deposit if he so elects; or, if he does not so elect,
the purchase price shall be the net asset value of his Shares
determined next after termination of such suspension (reduced by any
redemption charge), and payment therefor shall be made within the
time period required under the 1940 Act.

(b) The Trust may purchase Shares of a Series or Class by
agreement with the owner thereof at a purchase price not exceeding
the net asset value per Share (reduced by any redemption charge)
determined (1) next after the purchase or contract of purchase is
made or (2) at some later time.

(c) The Trust may pay the purchase price (reduced by any
redemption charge) in whole or in part by a distribution in kind of
securities from the portfolio of the relevant Series or Class,
taking such securities at the same value employed in determining net
asset value, and selecting the securities in such manner as the
Trustees may deem fair and equitable.

Section 3. Net Asset Value of Shares.

The net asset value of each Share of a Series or Class outstanding
shall be determined at such time or times as may be determined by or on
behalf of the Trustees. The power and duty to determine net asset value
may be delegated by the Trustees from time to time to one or more of the
Trustees or Officers of the Trust, to the other party to any contract
entered into pursuant to Section 1 or 2 of Article VII or to the
custodian or to a transfer agent or other person designated by the
Trustees.

The net asset value of each Share of a Series or Class as of any
particular time shall be the quotient (adjusted to the nearer cent)
obtained by dividing the value, as of such time, of the net assets
belonging to such Series or Class (i.e., the value of the assets
belonging to such Series or Class less the liabilities belonging to such
Series or Class exclusive of capital and surplus) by the total number of
Shares outstanding of the Series or Class at such time in accordance
with the requirements of the 1940 Act and applicable provisions of the
By-Laws of the Trust in conformity with generally accepted accounting
practices and principles.

The Trustees may declare a suspension of the determination of net
asset value for the whole or any part of any period in accordance with
the 1940 Act.

Section 4. Suspension of the Right of Redemption.

The Trustees may declare a suspension of the right of redemption or
postpone the date of payment for the whole or any part of any period in
accordance with the 1940 Act.

Section 5. Trust's Right to Redeem Shares.

The Trust shall have the right to cause the redemption of Shares of
any Series or Class in any Shareholder's account for their then current
net asset value and promptly make payment to the shareholder (which
payment may be reduced by any applicable redemption charge), if at any
time the total investment in the account does not have a minimum dollar
value determined from time to time by the Trustees in their sole
discretion.

ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION

Section 1. Limitation of Personal Liability and Indemnification of
Shareholders.

The Trustees, officers, employees or agents of the Trust shall have
no power to bind any Shareholder of any Series or Class personally or to
call upon such Shareholder for the payment of any sum of money or
assessment whatsoever, other than such as the Shareholder may at any
time agree to pay by way of subscription to any Shares or otherwise.

No Shareholder or former Shareholder of any Series or Class shall be
liable solely by reason of his being or having been a Shareholder for
any debt, claim, action, demand, suit, proceeding, judgment, decree,
liability or obligation of any kind, against, or with respect to the
Trust or any Series or Class arising out of any action taken or omitted
for or on behalf of the Trust or such Series or Class, and the Trust or
such Series or Class shall be solely liable therefor and resort shall be
had solely to the property of the relevant Series or Class of the Trust
for the payment or performance thereof.

Each Shareholder or former Shareholder of any Series or Class (or
their heirs, executors, administrators or other legal representatives
or, in case of a corporate entity, its corporate or general successor)
shall be entitled to be indemnified and reimbursed by the Trust to the
full extent of such liability and the costs of any litigation or other
proceedings in which such liability shall have been determined,
including, without limitation, the fees and disbursements of counsel if,
contrary to the provisions hereof, such Shareholder or former
Shareholder of such Series or Class shall be held to be personally
liable. Such indemnification and reimbursement shall come exclusively
from the assets of the relevant Series or Class.

The Trust shall, upon request by a Shareholder or former
Shareholder, assume the defense of any claim made against any
Shareholder for any act or obligation of the Trust or any Series or
Class and satisfy any judgment thereon.

Section 2. Limitation of Personal Liability of Trustees,
Officers, Employees or Agents of the Trust.

No Trustee, officer, employee or agent of the Trust shall have the
power to bind any other Trustee, officer, employee or agent of the Trust
personally. The Trustees, officers, employees or agents of the Trust
incurring any debts, liabilities or obligations, or in taking or
omitting any other actions for or in connection with the Trust are, and
each shall be deemed to be, acting as Trustee, officer, employee or
agent of the Trust and not in his own individual capacity.

Trustees and officers of the Trust shall be liable for their willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee or officer, as
the case may be, and for nothing else.

Section 3. Express Exculpatory Clauses and Instruments.

The Trustees shall use every reasonable means to assure that all
persons having dealings with the Trust or any Series or Class shall be
informed that the property of the Shareholders and the Trustees,
officers, employees and agents of the Trust or any Series or Class shall
not be subject to claims against or obligations of the Trust or any
other Series or Class to any extent whatsoever. The Trustees shall
cause to be inserted in any written agreement, undertaking or obligation
made or issued on behalf of the Trust or any Series or Class (including
certificates for Shares of any Series or Class) an appropriate reference
to the provisions of this Declaration, providing that neither the
Shareholders, the Trustees, the officers, the employees nor any agent of
the Trust or any Series or Class shall be liable thereunder, and that
the other parties to such instrument shall look solely to the assets
belonging to the relevant Series or Class for the payment of any claim
thereunder or for the performance thereof; but the omission of such
provisions from any such instrument shall not render any Shareholder,
Trustee, officer, employee or agent liable, nor shall the Trustee, or
any officer, agent or employee of the Trust or any Series or Class be
liable to anyone for such omission. If, notwithstanding this provision,
any Shareholder, Trustee, officer, employee or agent shall be held
liable to any other person by reason of the omission of such provision
from any such agreement, undertaking or obligation, the Shareholder,
Trustee, officer, employee or agent shall be indemnified and reimbursed
by the Trust.

ARTICLE XII
MISCELLANEOUS

Section 1. Trust is not a Partnership.

It is hereby expressly declared that a trust and not a partnership
is created hereby.

Section 2. Trustee Action Binding, Expert Advice, No Bond or Surety.

The exercise by the Trustees of their powers and discretions
hereunder shall be binding upon everyone interested. Subject to the
provisions of Article XI, the Trustees shall not be liable for errors of
judgment or mistakes of fact or law. The Trustees may take advice of
counsel or other experts with respect to the meaning and operation of
this Declaration of Trust, and subject to the provisions of Article XI,
shall be under no liability for any act or omission in accordance with
such advice or for failing to follow such advice. The Trustees shall
not be required to give any bond as such, nor any surety if a bond is
required.

Section 3. Establishment of Record Dates.

The Trustees may close the Share transfer books of the Trust
maintained with respect to any Series or Class for a period not
exceeding sixty (60) days preceding the date of any meeting of
Shareholders of the Trust or any Series or Class, or the date for the
payment of any dividend or the making of any distribution to
Shareholders, or the date for the allotment of rights, or the date when
any change or conversion or exchange of Shares of any Series or Class
shall go into effect; or in lieu of closing the Share transfer books as
aforesaid, the Trustees may fix in advance a date, not exceeding sixty
(60) days preceding the date of any meeting of Shareholders of the Trust
or any Series or Class, or the date for the payment of any dividend or
the making of any distribution to Shareholders of any Series or Class,
or the date for the allotment of rights, or the date when any change or
conversion or exchange of Shares of any Series or Class shall go into
effect, or the last day on which the consent or dissent of Shareholders
of any Series or Class may be effectively expressed for any purpose, as
a record date for the determination of the Shareholders entitled to
notice of, and, to vote at, any such meeting and any adjournment
thereof, or entitled to receive payment of any such dividend or
distribution, or to any such allotment of rights, or to exercise the
rights in respect of any such change, conversion or exchange of shares,
or to exercise the right to give such consent or dissent, and in such
case such Shareholders and only such Shareholders as shall be
Shareholders of record on the date so fixed shall be entitled to such
notice of, and to vote at, such meeting, or to receive payment of such
dividend or distribution, or to receive such allotment or rights, or to
exercise such rights, as the case may be, notwithstanding, after such
date fixed aforesaid, any transfer of any Shares on the books of the
Trust maintained with respect to any Series or Class. Nothing in the
foregoing sentence shall be construed as precluding the Trustees from
setting different record dates for different Series or Classes.

Section 4. Termination of Trust.

(a) This Trust shall continue without limitation of time but
subject to the provisions of paragraphs (b), (c) and (d) of this
Section 4.

(b) The Trustees may, by unanimous action, with the approval
of the holders of a majority vote of the Shares of each Series or
Class entitled to vote and voting separately by Series or Class,
sell and convey the assets of the Trust or any Series or Class to
another trust or corporation organized under the laws. Upon making
provision for the payment of all such liabilities, by such
assumption or otherwise, the Trustees shall distribute the remaining
proceeds ratably among the holders of the Shares of that Series or
Class then outstanding.

(c) Subject to a Majority Shareholder Vote by such Series or
Class, the Trustees may at any time sell and convert into money all
the assets of the Trust or any Series or Class. Upon making
provision for the payment of all outstanding obligations, taxes and
other liabilities, accrued or contingent, belonging to each Series
or Class, the Trustees shall distribute the remaining assets
belonging to each Series or Class ratably among the holders of the
outstanding Shares of that Series or Class.

(d) Upon completion of the distribution of the remaining
proceeds of the remaining assets as provided in paragraphs (b) and
(c), the Trust or the applicable Series or Class shall terminate and
the Trustees shall be discharged of any and all further liabilities
and duties hereunder or with respect thereto and the right, title
and interest of all parties shall be canceled and discharged.

Section 5. Offices of the Trust, Filing of Copies,
Headings, Counterparts.

The Trust shall maintain a usual place of business in Massachusetts,
which, initially, shall be c/o Donnelly, Conroy & Gelhaar, 176 Federal
Street, Boston, Massachusetts 02110, and shall continue to maintain an
office at such address unless changed by the Trustees to another
location in Massachusetts. The Trust may maintain other offices as the
Trustees may from time to time determine. The original or a copy of
this instrument and of each declaration of trust supplemental hereto
shall be kept at the office of the Trust where it may be inspected by
any Shareholder. A copy of this instrument and of each supplemental
declaration of trust shall be filed by the Trustees with the
Massachusetts Secretary of State and the Boston City Clerk, as well as
any other governmental office where such filing may from time to time be
required. Headings are placed herein for convenience of reference only
and in case of any conflict, the text of this instrument, rather than
the headings shall control. This instrument may be executed in any
number of counterparts each of which shall be deemed an original.

Section 6. Applicable Law.

The Trust set forth in this instrument is created under and is to be
governed by and construed and administered according to the laws of The
Commonwealth of Massachusetts. The Trust shall be of the type commonly
called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are
ordinarily exercised by such a trust.

Section 7. Amendments -- General.

Prior to the initial issuance of Shares pursuant to Section 3 of
Article III, a majority of the Trustees then in office may amend or
otherwise supplement this instrument by making a Declaration of Trust
supplemental hereto, which thereafter shall form a part hereof.
Subsequent to such initial issuance of Shares, amendments or supplements
to this instrument may be authorized by a majority of the Trustees then
in office and by the holders of a majority of the Shares of all Series
and classes then outstanding and entitled to vote thereon (except that
any amendments or supplements changing the name of the Trust or pursuant
to Section 8 hereunder may be made without shareholder approval), or by
any larger vote which may be required by applicable law or this
Declaration of Trust in any particular case, which amendment or
supplement thereafter shall form a part hereof. Any such amendment or
supplement (which may be in the form of a complete restatement) may be
evidenced by either (i) a supplemental Declaration of Trust signed by at
least a majority of the Trustees then in office or (ii) by a certificate
of the President and Secretary of the Trust setting forth such amendment
or supplement and certifying that such amendment or supplement has been
duly authorized by the Trustees, and if required, by the shareholders.
Copies of the supplemental Declaration of Trust or the certificate of
the President and Secretary, as the case may be, shall be filed as
specified in Section 5 of this Article XII.

Section 8. Amendments -- Series.

The establishment and designation of any series or class of Shares
in addition to those established and designated in Section 5 of
Article III hereof shall be effective upon the execution by a
majority of the then Trustees of an amendment to this Declaration of
Trust, taking the form of a complete restatement or otherwise,
setting forth such establishment and designation and the relative
rights and preferences of any such Series or Class, or as otherwise
provided in such instrument.

Without limiting the generality of the foregoing, the Declaration of
the Trust may be amended to:

(a) create one or more Series or Classes of Shares (in
addition to any Series or Classes already existing or otherwise)
with such rights and preferences and such eligibility requirements
for investment therein as the Trustees shall determine and
reclassify any or all outstanding Shares as Shares of particular
Series or Classes in accordance with such eligibility requirements;

(b) combine two or more Series or Classes of Shares into a
single Series or Class on such terms and conditions as the Trustees
shall determine;

(c) change or eliminate any eligibility requirements for
investment in Shares of any Series or Class, including without
limitation the power to provide for the issue of Shares of any
Series or Class in connection with any merger or consolidation of
the Trust with another trust or company or any acquisition by the
Trust of part or all of the assets of another trust or company;

(d) change the designation of any Series or Class of Shares;

(e) change the method of allocating dividends among the
various Series and Classes of Shares;

(f) allocate any specific assets or liabilities of the Trust
or any specific items of income or expense of the Trust to one or
more Series and Classes of Shares;

(g) specifically allocate assets to any or all Series or
Classes of Shares or create one or more additional Series or Classes
of Shares which are preferred over all other Series or Classes of
Shares in respect of assets specifically allocated thereto or any
dividends paid by the Trust with respect to any net income, however
determined, earned from the investment and reinvestment of any
assets so allocated or otherwise and provide for any special voting
or other rights with respect to such Series or Classes.

Section 9. Use of Name.

The Trust acknowledges that Federated Investors has reserved the
right to grant the non-exclusive use of the name "TAX-FREE INSTRUMENTS
TRUST" or any derivative thereof to any other investment company,
investment company portfolio, investment adviser, distributor, or other
business enterprise, and to withdraw from the Trust or one or more
Series or Classes any right to the use of the name "TAX-FREE INSTRUMENTS
TRUST".

IN WITNESS WHEREOF, the undersigned have executed this instrument the day
and year first above written.

/s/ John F. Donahue /s/ Edward L. Flaherty, Jr.
John F. Donahue Edward L. Flaherty, Jr.

/s/ John T. Conroy, Jr. /s/ Peter E. Madden
John T. Conroy, Jr. Peter E. Madden

/s/ William J. Copeland /s/ Gregor F. Meyer
William J. Copeland Gregor F. Meyer

/s/ James E. Dowd /s/ Wesley W. Posvar
James E. Dowd Wesley W. Posvar

/s/ Lawrence D. Ellis, M.D. /s/ Marjorie P. Smuts
Lawrence D. Ellis, M.D. Marjorie P. Smuts

COMMONWEALTH OF PENNSYLVANIA )
: ss:
COUNTY OF ALLEGHENY )

I hereby certify that on February 24, 1994, before me, the subscriber, a
Notary Public of the Commonwealth of Pennsylvania, in for the County of
Allegheny, personally appeared JOHN F. DONAHUE, WILLIAM J. COPELAND, JAMES E.
DOWD, LAWRENCE D. ELLIS, M.D., EDWARD L. FLAHERTY, JR., MARJORIE P. SMUTS,
GREGOR F. MEYER, WESLEY W. POSVAR, PETER E. MADDEN, and JOHN T. CONROY, JR.
who acknowledged the foregoing Declaration of Trust to be their act.

Witness my hand and notarial seal the day and year above written.

/s/ Erin J. Ratesic
Notary Public

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